Trade Tidbits – October 10, 2025

Stranger Things

The last 24 or so hours have been pretty spicy on the China front as the two sides jockey for leverage ahead of a meeting(?) between Presidents Donald Trump and Xi Jinping at the end of the month in South Korea.

Before getting into the sequence of events, both sides have been laying out some of their demands in the ramp-up. President Trump told a cabinet meeting he expects China to make some soybean purchases. China has a few asks too. They want the U.S. to roll back national security scrutiny of Chinese investments – and to lower tariffs on inputs going to Chinese factories in the U.S. They also want to get rid of the 20% IEEPA fentanyl tariffs.

One other bit of context worth noting is that the Section 301 fees on Chinese ships take effect next Tuesday. CBP sent out a CSMS notice to implement the fees, noting, “The burden for determining if a vessel owes the fee is on the operator, NOT CBP” (emphasis is CBP’s). Recall that last week, China had prepped some retaliation.

Ok now let’s get into it.

Yesterday, China launched a broadside of measures. The biggie was vastly expanding export controls rare earths and related products. The reporting has been a little hard to follow, so I’m going to do my best to get this right. There are five sets of export controls on lithium batteries, medium and heavy rare earth elements, superhard materials, rare earth equipment, and rare earth-related technologies. There’s also a sixth that seems to basically create a foreign direct product rule (FDPR) on certain Chinese-origin minerals. That is to say, a Chinese license is required for foreign entities using certain Chinese-origin minerals, regardless of where the manufacturing is taking place. A China observer noted that the announcements are numbered 55, 56 ,57, 58, 61, and 62, which begs the question of what 59 and 60 involve.

There is also a labor element to the restrictions that bars Chinese citizens from participating in unauthorized foreign mining and magnet manufacturing operations. And that’s not all. China announced fees on American-owned ships docking at Chinese ports (to the extent that happens), as well as an antitrust probe into Qualcomm too.

When asked yesterday at a cabinet meeting about the news, President Trump said, “We have the ultimate export. We have import and we have export. We import from China massive amounts. And, you know, maybe we’ll have to stop doing that.” A few other things to note that happened before 10:57am today: A Reuters story floating restrictions on banning Chinese airlines from landing in the U.S. if they traverse Russian airspace; a Bloomberg story floating restrictions on Chinese router company TP-Link Systems; and the addition of 19 Chinese companies to the Entity List.

Which brings us to 10:57am, when President Trump fired off a very long truth that noted “some very strange things” out of China. He said that the export controls “came out of nowhere” and that “things that were routine are no longer routine at all” (a position echoed by USTR’s X account). The truth had ominous tones to it too, saying, “There is no way that China should be allowed to hold the World ‘captive.’” He noted, “The U.S. has Monopoly positions also, much stronger and more far reaching that China’s. I have just not chosen to use them, there was never a reason for me to do so — UNTIL NOW!” and “For every Element that they have been able to monopolize, we have two.” He floated not only canceling the South Korea meeting but also a “massive increase of Tariffs” and promised “many other countermeasures that are…under serious consideration.” Stocks fell about 2% in the wake of the truth. We’ll see what happens from here.

A few more China pieces to note before closing this part out:

• The Senate passed the National Defense Authorization Act (NDAA) that contained a provision that requires advanced chipmakers like Nvidia and AMD to give American companies priority access to products before China.
• The Select Committee on the Chinese Communist Party released a report noting the role of American, Dutch, and Japanese companies in China’s chip industry.
• The New York Times had a story about how China may be obtaining Nvidia chips despite restrictions.
• The U.S. criticized China’s announcement that it would forego developing country benefits at the WTO as too little too late.
• Chinese clothing companies are “very aggressively” selling into the EU due to the U.S. tariffs.