In a dramatic escalation of the US-China trade war, former President Donald Trump has vowed to impose unprecedented 100% tariffs on Chinese goods and restrict “critical software” exports, a direct retaliation to Beijing’s recent rare earth export limitations. This move, poised to reshape global technology supply chains, underscores deep-seated concerns over China’s civil-military fusion strategy and marks a significant hardening of economic warfare between the two superpowers.
The long-standing trade and technology rivalry between the United States and China has reached a new boiling point, with the Trump administration signaling a significant escalation. Following China’s imposition of new restrictions on rare earth minerals, former US President Donald Trump announced plans for sweeping new tariffs and export controls on “critical software,” intensifying the economic confrontation between the world’s two largest economies.
China’s Rare Earth Gambit: A Strategic Play
The catalyst for the latest US response was China’s decision to dramatically expand its export controls on rare earth elements. These measures, announced by Beijing, widen limits on processing and manufacturing technologies and prohibit cooperation with foreign companies without prior government authorization, as reported by state media. The Chinese commerce ministry stated that these actions are intended to safeguard national security and interests, targeting technologies involved in rare earth mining, smelting, separation, magnetic material production, and recycling of secondary resources.
China holds a dominant position in the global rare earth market, producing a vast majority of these essential minerals. Rare earths are vital components in numerous high-tech products, ranging from smartphones and electric vehicles to advanced military equipment. Beijing’s strategic move to restrict their export underscores its leverage in global supply chains and its willingness to use economic tools to assert its interests.
Trump’s Retaliatory Strike: Tariffs and Software Curbs
In a direct and forceful response, Donald Trump vowed to impose a 100% tariff on Chinese goods, in addition to existing tariffs, starting November 1, 2025, or potentially sooner. Beyond tariffs, a more critical and potentially disruptive measure is the planned restriction on the export of “critical software.” This move aims to curb a wide array of software-powered exports to China, encompassing everything from everyday laptops to sophisticated jet engines, as detailed by Reuters reporting. The proposed controls would specifically target global shipments of items that either contain US software or were produced using US software, significantly broadening the scope of previous restrictions.
This comprehensive approach echoes restrictions previously imposed by the Biden administration on Moscow following its 2022 invasion of Ukraine. Those rules similarly restricted exports to Russia of items made globally using US technology or software, demonstrating a precedent for such sweeping controls. The consideration of these measures by the Trump administration signals a dramatic escalation in its confrontation with China, potentially leading to widespread disruptions in global trade and technology product availability.
The ‘Civil-Military Fusion’ Doctrine and US Concerns
At the heart of US export control policies against China is the concern over Beijing’s “civil-military fusion” strategy. This policy, actively promoted by President Xi Jinping, aims to develop China’s military might and technological capabilities in tandem, blurring the lines between civilian and military applications. US officials fear that advanced technology initially sold to China for commercial purposes could ultimately be diverted to military use, enhancing China’s defense capabilities at America’s expense.
To counter this, the Trump administration has been tightening rules to prevent such diversions. Key measures under discussion include:
- Eliminating the Civilian Exemption (Civ Exemption): This would remove the ability to export certain US technology without a license if it is for a non-military entity and use. Items like field programmable gate array (FPGA) integrated circuits, produced by companies such as Intel Corp and Xilinx, would face new hurdles for Chinese importers and nationals.
- Blocking Military Entities: Even if purchasing for civilian use, China’s military would be prohibited from obtaining specific items without a license. This extends to scientific equipment like digital oscilloscopes, airplane engines, and certain types of computers.
- Requiring US Approval for Foreign Companies: A proposed change would mandate that foreign companies shipping certain American goods to China seek approval not only from their own governments but also from the US government, addressing concerns that some US allies may not share the same level of apprehension regarding China’s civil-military fusion.
These measures reflect a growing nervousness within the US government and a hardening stance among China hardliners who argue that the distinction between civilian and military applications in export control regulations is no longer relevant given China’s stated policy.
Broader Implications and Industry Reactions
The proposed expansion of export controls and tariffs carries significant implications for the global economy and technology industry. Industry groups have voiced concerns that such stringent rules could have a “chilling effect,” potentially driving Chinese consumers and businesses towards foreign rivals and away from American technology. The uncertainty surrounding US policy, characterized by instances where previous restrictions on Nvidia’s and AMD’s AI chips and chip design software were first imposed and then lifted, adds to the anxiety within the tech sector.
China, for its part, has consistently opposed what it terms “unilateral long-arm jurisdiction measures” imposed by the US. A spokesperson for the Chinese embassy reiterated that China would “take resolute measures to protect its legitimate rights and interests” if the US continues down this path. The current US tariffs on Chinese imports already hover around 55%, with Trump’s latest threat potentially pushing them to an unprecedented 155%.
A Diplomatic Tightrope Walk Amidst Escalation
The announcement of these heightened measures by Trump came just weeks before a planned meeting with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea. Following China’s rare earth restrictions, Trump initially lashed out, stating there was “no reason” to proceed with the planned sit-down. However, Trump later softened his tone, posting that “The U.S.A. wants to help China, not hurt it!!!” This diplomatic back-and-forth highlights the complex and often contradictory nature of US-China relations, even as the rhetoric and policy proposals grow more confrontational. High-level discussions continue, with US Treasury Secretary Scott Bessent expected to meet with Chinese Vice Premier He Lifeng, as also reported by Reuters, ahead of any potential Trump-Xi engagement.
The ultimate implementation and impact of these threatened tariffs and software curbs remain uncertain. However, the mere consideration of such drastic measures underscores a growing global divide over technology and trade, signaling a long-term shift towards technological decoupling and heightened competition for industrial dominance.
