The United States and China have each imposed costs and restrictions that threaten to completely cut off trade between the two countries. But if an agreement is reached, the dispute could be resolved before the maximum tariffs take effect.
President Trump accuses China of monopolizing rare earths, threatens retaliation
President Donald Trump has criticized China’s rare earth export restrictions and threatened retaliatory tariffs.
WASHINGTON – President Donald Trump departed for Asia on Friday night, eager to resolve a trade war with China over tariffs and reopen shuttered doors to America’s third-largest agricultural market, as U.S. farmers and global financial markets tensely await the outcome.
Trump’s trip comes amid a four-week U.S. government shutdown with no end in sight, and as the second-term Republican president threatens to impose nearly triple tariffs on Chinese imports on Nov. 1 unless a new trade deal is reached with China. China’s retaliatory taxes have halted major U.S. imports such as soybeans and restricted sales of rare earth minerals essential to electronic devices such as cell phones and computers.
After spending several days in Malaysia and Japan, President Trump is scheduled to visit South Korea at the end of his tour on October 30th, where he will meet with Chinese President Xi Jinping. President Trump has expressed optimism that a deal can be reached, even as U.S. farmers worry about a sharp fall in the price of their fall crops.
Here’s what the trip means for President Trump and what you need to know about tariffs and trade.
President Trump imposes tariffs, prompting China to retaliate
During the first few months of his second administration, President Trump disrupted global financial markets by imposing tariffs on countries around the world, and after many twists and turns, he settled on imposing a 57% tariff on imports from China.
Raising money, pressuring China for a trade deal to import more American goods, and encouraging manufacturing to bring jobs back to the United States were all part of President Trump’s strategy.
China initially retaliated by imposing a 34% tax on U.S. products because products like soybeans became too expensive to buy. China subsequently increased the pressure by announcing export restrictions on rare earth minerals.
In response, President Trump threatened to raise tariffs to 157% on November 1 unless the two countries reach a trade deal on more reasonable terms. He acknowledged that such high interest rates could temporarily halt trade between the two countries.
“If they pay enough tariffs, at some point we’re saying, ‘We’re not going to do business with you,'” President Trump told reporters on Oct. 20.
After President Trump announced the tariffs on April 2nd, global financial markets plunged. On October 10, when President Trump repeated his threat of massive tariffs on China, the market fell again. But the market has recovered from the volatility, with the S&P 500, Dow Jones Industrial Average, and Nasdaq each posting double-digit gains for the year to October 23.
Trade war cuts U.S. imports from China in half = Fed
A lack of U.S.-China trade risks defeating the purpose of tariff financing.
The Committee for a Responsible Federal Budget, a nonpartisan think tank, estimated that a 60% tariff on China would generate a face value of $2.4 trillion in Treasury revenue over 10 years. But the committee predicted that the tax rate would raise only $300 billion over 10 years, possibly costing the U.S. Treasury $50 billion, as trade behavior changes to avoid higher taxes.
The trade war that began on April 2nd has already cut monthly trade volume in half. Total imports from China were $41.6 billion in January, but fell to $19 billion in June, according to the Federal Reserve.
But JPMorgan economist Abiel Reinhart said the “most likely outcome” of trade talks between Trump and Xi is to avoid 100% U.S. tariffs on China, and that “export controls on both sides would be permissive enough to avoid an embargo.”
President Trump wants to conclude a trade deal with China
President Trump expressed optimism earlier this week that a trade deal could be reached with President Xi, but warned that may not be the case.
“I think we’ll come to a deal,” President Trump said on October 20. “They threatened us with rare earths and they threatened me with tariffs.”
President Trump has already completed trade deals with South Korea and Japan, two of the other countries he will visit on his Asia tour.
Treasury Secretary Scott Bessent and U.S. Trade Representative Jamison Greer visited Malaysia on October 22 to continue negotiations with the Chinese side. Bessent told reporters before leaving office that curbing software exports was an option, but would be coordinated with economic allies Canada, France, Germany, Italy, Japan and the United Kingdom.
“Everything is on the table and I want to make sure that we approach the negotiations with great respect and goodwill,” Bessent said. “China has imposed export controls on these rare earths, not just in the United States, but around the world. If these export controls are implemented, whether it’s software, engines, or anything else, they will be working with our G7 allies.”
‘It’s probably not going to happen’: President Trump warns Senate Republicans about China deal
Despite President Trump’s optimism, he warned Senate Republicans at a Rose Garden lunch on Oct. 21 that a deal with China may not materialize.
“There are certainly a lot of people waiting for that,” Trump said. “Maybe it won’t happen. For example, someone might say, ‘I hate you, I don’t want to see you.’ But that’s not really a bad thing, it’s just business.”
President Trump told reporters on October 16 that he has a “great relationship” with President Xi, but that “China likes to take advantage of people, so it gets rocky sometimes.” President Trump said the relationship was “fine.”
“If not, that’s OK too,” Trump said. “You have to go where the punches are thrown and act.”
Tensions between leaders are not new. President Trump hosted Kim Pyong at his Florida mansion, Mar-a-Lago, in April 2017, but returned home without making any promises on economic issues or dealing with North Korea.
In 2018, President Trump imposed tariffs of 10% on aluminum, 30% on solar panels and electric vehicles, and 25% on steel and nearly everything else on Chinese goods. But he complained that the Biden administration granted exceptions to the tariffs, which meant they were not collected as aggressively.
President Trump told reporters on October 20, “Some presidents have allowed China and other countries to get away with murder. We will not allow that.”
China: ‘not afraid’ of trade war
China’s official response to the trade war has been praised. However, on October 11, a spokesperson for China’s Ministry of Commerce urged the United States to “immediately correct the wrong practices.”
“Intentionally threatening high tariffs is not the right way to get along with China,” the spokesperson said. “China’s position on the trade war is consistent. We don’t want a trade war, but we’re not afraid of it.”
The department called on the United States to continue negotiations to resolve the dispute towards a sustainable trade relationship.
“If the United States insists on going in the wrong direction, China will take decisive measures to protect its legitimate rights and interests,” the spokesperson said.
China is the third-largest customer for U.S. agriculture and top for soybeans
One of the reasons President Trump imposed the tariffs is because he is concerned about the U.S. trade deficit, which sends more money overseas through imports than it receives domestically through exports. According to the Office of the U.S. Trade Representative, the United States spent $295.5 billion more on Chinese goods in 2024 than it sold.
However, U.S. sales have slumped due to the trade war. China’s retaliatory tariffs on soybeans have left the country, once the No. 1 exporter of U.S. agricultural products, uncompetitive against rival sellers from Argentina and Brazil. In a social media post on October 14, President Trump called China’s tariffs an “economically hostile act.”
According to the U.S. Department of Agriculture, U.S. agricultural sales to China will total $24.4 billion in 2024, and have increased further in recent years. Soybeans accounted for more than half of last year’s total, at $12.6 billion.
“Trade wars are harmful to everyone, and these recent developments are extremely disappointing at a time when soybean farmers face an increasingly severe financial crisis,” said Caleb Ragland, a Kentucky farmer and president of the U.S. Soybean Association.
President Trump said he recognizes the concerns about farms and is fighting for them.
On October 20, President Trump told reporters about China, “I want them to buy soybeans.” “They stopped buying our soybeans because they thought it was a punishment, and it’s a punishment on our farmers, but we’re not going to allow that to happen.”
Supreme Court to hear arguments on President Trump’s tariffs on November 5th
The Supreme Court is scheduled to hear arguments on Nov. 5 and decide the fate of President Trump’s global tariffs, legal experts said. the biggest This year’s big hit case.
The case will help set guidelines for Trump’s aggressive assertion of presidential power.
President Trump invoked the International Emergency Economic Powers Act of 1977, which has historically been used to impose economic sanctions and other penalties on foreign enemies, to impose tariffs around the world. But two lower courts ruled that he overstepped his authority.
In a 7-4 decision on August 29, the U.S. Court of Appeals for the Federal Circuit said, “Although the Act provides the President with significant authority to take a number of actions in response to a declared national emergency, these actions do not expressly include the power to impose tariffs, tariffs, or the like, or to levy taxes.”
President Trump has repeatedly said the United States faces “economic disaster” if tariffs are not continued.
President Trump told reporters on October 15, “We have a big case coming up before the Supreme Court, and I say this is one of the most important cases in the history of our country, because if we don’t win this case, our country will be in a weakened, troubled financial position for many years to come.” “If we win, we will be the strongest economy in the world.”
The president said he may attend Supreme Court oral arguments – a first for a sitting commander-in-chief – before voters in Virginia, New Jersey, California, New York City and other cities and states around the country the morning after Election Day 2025.
