Since October, friction between China and the United States in many fields such as ship costs, rare earth exports, and antitrust has increased significantly.
Among them, China's measures to tighten rare earth exports are more "lethal", directly affecting the US high-tech and new energy industry chain, and are also considered the main reason why Trump threatened to impose high tariffs across the board.
The threat of "comprehensive tax increases" in the United States
Some of these actions are China's first move, and some are counterattacks against US policy. According to the timeline, it is sorted out as follows:
1. The "port fee" of the ship is increased by each other
The United States takes the lead: On October 3, the United States announced that starting from October 14, all ships owned, operated or built by China, as well as all foreign-made car carriers, will have to pay "additional fees" when entering U.S. ports. This policy has been in the making for a long time - in April last year, the United States launched a "301 investigation" on the grounds of such ships, and in April this year, it was officially decided to charge, and it will be implemented after a six-month transition period.
China's response: In response, China's Ministry of Communications announced on October 10 that it would charge "special port fees" for U.S. ships entering Chinese ports from the same day (October 14).
However, this move is more of a symbolic counterattack, because there are not many direct freight between China and the United States, and the actual impact is limited.
2. China tightens rare earth exports, which is more lethal
China's control of rare earths has long been rumored, but it has been in action since October 9:
From November 8, export restrictions will be imposed on superhard materials, some rare earth equipment, 5 kinds of medium and heavy rare earths, lithium batteries and artificial graphite anode materials; At the same time, the new regulations, which will take effect immediately, also require that any foreign company must first obtain approval from the Chinese government if it wants to use Chinese rare earths or related technologies; What's even more ruthless is that as long as the value of China's rare earths contained in the product exceeds 0.1% of the total value, it must apply for a license.
This means that global technology and manufacturing companies such as Apple and Tesla may be stuck as long as Chinese rare earths are used in the supply chain, even if it is just a little. This move directly hit the "seven inches" of the US high-tech and new energy industries, and is also regarded as the main fuse for Trump's sudden threat to raise taxes.
3. Trump threatened to impose 100% tariffs, and the market crashed
On the evening of October 10, Trump suddenly said: from November 1, 100% tariffs will be imposed on all Chinese imports, and it also plans to restrict the export of key software.
If implemented, the total tariff rate of the United States on Chinese goods will soar from the current 50%-60% to 180% or even higher (previously tariffs + fentanyl tariffs + peer tariffs, etc.).
As soon as the news came out, U.S. stocks fell sharply on Friday - the market is worried that a new round of trade war will break out in full swing, and the global supply chain will fluctuate violently again.
Turning the face is faster than turning the book
Since Trump came to power, the Sino-US tariff friction has gone through three stages: "escalation, easing and re-escalation":
The first stage: from January to April, it continues to increase, and the more troublesome it becomes
In February and March, Trump imposed two additional 10% tariffs on Chinese goods on the grounds of "cracking down on fentanyl smuggling"; in April, in the name of "reciprocity", another 34% tariff was added, and then threatened to increase to 91%; After the operation, the total tariffs of the United States on Chinese goods were as high as 147% (including comprehensive tariffs, industry tariffs, etc.), a record high.
As a result, the global market plummeted, and the United States itself suffered - the stock market, bond market, and exchange rate fell across the board, and there was a rare "triple kill of stocks and bonds".
The second stage: from May to September, shake hands and make peace, and gradually cool down
China and the United States began to sit down and talk, and relations eased significantly:
On May 12, the two sides reached a preliminary consensus after the Geneva talks, and the United States significantly reduced the tariffs imposed by this round from a high level to 30%; Subsequently, three rounds of consultations were held in London (June), Stockholm (July), and Madrid (September); The leaders of China and the United States also spoke twice, especially on September 19, when the two sides reached an agreement on the TikTok issue and released positive signals of a possible face-to-face meeting.
This period was the most relaxed period of Sino-US relations, and the market was looking forward to reaching a comprehensive trade and investment agreement and even abolishing fentanyl tariffs.
The third stage: October, the situation changed abruptly, and it was tense again
Just when everyone thought that "reconciliation was in sight", the situation suddenly reversed in October. Although this upgrade has a fuse (such as China's tightening of rare earth exports), compared with the previous easing atmosphere, this "return to the horse" threat of tax increases is unexpected and a major setback.
The "big agreement" and "leaders' meeting" that the market originally expected were instantly overshadowed, and Sino-US relations were once again uncertain.
Will the tariff stick fall when it is held high?
The sudden escalation of tariffs between China and the United States is indeed unexpected, but it also shows how complex and difficult the negotiations between the two countries are.
What will happen next? Is it a "bluff" to force the other party to make concessions, and will they sit down and talk in the end? Or do you really want to upgrade all the way, or even completely "tear your face"? Although the future is full of uncertainties, guess boldly: the two sides may eventually renegotiate or even reach some kind of compromise. This possibility is not small, it may even be great.
Why do you judge this? Let's look at a detail: Trump says the new tariffs will begin on November 1. Coincidentally, the APEC summit is from October 31 to November 1. This timing is obviously not a coincidence - it is more like leaving a "window" for negotiations, putting pressure on them with harsh words first, and then acting according to the situation after the international conference.
You know, 100% tariffs cannot be implemented for a long time, and it is a disaster for China and the United States:
For the United States, this is tantamount to "self-harm": soaring prices of imported goods will directly push up inflation, make it more difficult for the Fed to cut interest rates, and may even trigger a crisis in US bond interest rates; For China, exports are blocked, corporate orders are reduced, and the economy is also under pressure.
Jingtai roughly estimates that if 100% tariffs are really added, the actual import tax rate in the United States will soar from the current 16%-17% to more than 20%, which may lead to a further rise in core inflation in the United States from the current 3.4%-3.5% and return to the nightmare of "high inflation".
In other words, no one can afford the consequences of a full-scale "decoupling" or trade embargo.
Because of this, when both sides have confidence and trump cards, but "fighting" and losing both, it is easier to achieve a fragile balance of "no one is satisfied, but everyone has to accept" - just like the "nuclear deterrence" during the Cold War, no one dares to really do it.
Of course, this short-term compromise is only a "temporary truce". In the long run, the uncertainty of Sino-US relations is still very large, there will be friction, and the storm will not stop. Moreover, the current market, economy, and policy environment are very different from April, so the market's reaction this time will be different from before.
