China’s announcement on Friday marks a significant escalation in the ongoing trade tensions with the United States, signaling a hardening of Beijing’s stance and a shift toward more aggressive economic countermeasures. By imposing an additional 34 per cent tariff on all U.S. goods starting April 10, the Chinese government is making it clear that it will not passively absorb the economic shockwaves from Washington’s trade policies. This tit-for-tat retaliation comes just two days after former President Donald Trump announced a similar 34 per cent tariff on Chinese imports, in addition to a 20 per cent tariff already imposed earlier in the year. These layered duties now raise the total tariff burden on Chinese goods entering the U.S. to a steep 54 per cent, potentially setting off a full-scale trade war.
But tariffs are only part of China’s broader economic counteroffensive. In a move that could have far-reaching consequences for the global tech and defense sectors, Beijing has announced new export controls on medium and heavy rare-earth elements, effective April 4. These include strategically vital minerals such as samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, all of which are essential for manufacturing electronics, EV batteries, wind turbines, and military hardware. China currently dominates the global rare-earth supply chain, and the decision to restrict exports of these elements is seen as a direct challenge to American technological superiority.
In its official statement, China’s Commerce Ministry said that the decision to implement these controls was guided by national security considerations and international legal obligations, including non-proliferation treaties. Analysts interpret this as a message that China is prepared to weaponize its dominance in critical minerals as part of its economic arsenal, a strategy that could disrupt global supply chains and push prices of high-tech components even higher.
In parallel, the Chinese government also announced that it is blacklisting 11 foreign companies, placing them on its growing “unreliable entity” list. While the list of names has not been disclosed, inclusion allows the Chinese authorities to impose wide-ranging punitive measures, including denial of licenses, fines, investment bans, or even expulsion from the Chinese market. This move mirrors U.S. efforts to blacklist Chinese companies like Huawei, ZTE, and DJI under national security grounds, and appears to be a tit-for-tat tactic designed to create strategic discomfort for American and allied firms operating in China.
However, to reduce disruption for goods already in transit, China’s State Council Tariff Commission clarified that shipments that depart before 12:01 AM on April 10 and arrive before May 13 will not be subject to the new tariffs. This grace period is aimed at avoiding immediate damage to trade commitments and minimizing confusion for importers and exporters scrambling to navigate the new rules.
China’s retaliatory measures follow a stern warning it issued on Thursday, urging the United States to withdraw its latest tariffs and cautioning that it would “take all necessary countermeasures” to protect its national interests. “China firmly opposes this and will respond accordingly,” the Commerce Ministry said in a strongly-worded statement that underlined the stakes involved.
The United States, meanwhile, is doubling down. Trump’s executive order to close the “de minimis” loophole—which allowed low-value imports under $800 to enter duty-free—particularly targeted Chinese e-commerce giants like Shein and Temu, who leveraged the loophole to flood the American market with inexpensive goods. The closure of this loophole could sharply reduce the competitiveness of such platforms, which will now face a higher cost of entry into the U.S. market.
The broader economic context is also significant. Trump’s administration is once again pressuring Beijing over its failure to meet obligations under the 2020 “Phase 1” trade deal, which mandated a $200 billion increase in U.S. exports to China over two years. China has cited COVID-19 disruptions as the reason for its underperformance, but U.S. trade officials are reportedly unsatisfied with that explanation. Data from Chinese customs shows that while imports of U.S. goods rose modestly from $154 billion in 2017 to $164 billion in 2024, the shortfall from the agreed benchmarks remains considerable.
This fresh round of economic skirmishes is also fueling concerns among global investors and multinational corporations. Analysts warn that continued escalation could lead to a bifurcated global trade system—one that forces countries and companies to pick sides between Washington and Beijing. Supply chains, especially in high-tech industries, could face massive realignment as businesses attempt to hedge against geopolitical risk.
Some experts believe that Beijing’s move to weaponize rare earths could further intensify the U.S. drive toward reshoring production and investing in domestic alternatives. But such transitions are time-consuming and costly. In the short term, American manufacturers dependent on these materials could face serious supply shocks and rising input costs, especially in the electronics, defense, and renewable energy sectors.
Overall, the developments signal a sharp deepening of hostilities between the two powers, with growing potential to spill over into finance, technology, and even diplomatic cooperation. What began as a trade dispute is now transforming into a broader economic cold war—one that could define the next phase of global geopolitics. As both sides dig in, a negotiated resolution seems increasingly distant, and the world economy braces for the fallout.
