US–China Trade War Escalates: Trump’s Tariff Threat Sparks China’s Hardline Retaliation

Trump blasted out a warning on his social media platform Truth Social about China’s tough stance on trade. He claimed “China sent an extremely hostile letter to the world” by announcing that starting November 1, 2025, it will “impose large-scale export controls on nearly every product they make, and some not even made by them”.

The US, striking back, plans to “impose a tariff of 100% on China, over and above any tariff they are currently paying”, plus export controls on critical software. This move will also start on November 1, 2025.

And, Trump criticized China’s rare earth export limits and said that there was no reason for meeting with Xi Jinping at the upcoming APEC summit in South Korea — though he later softened the tone, saying the meeting might still take place.

Markets React: Stock Sell-Off

The market slammed back hard after Trump’s announcement. On “Black Friday,” the Dow plunged 878 points to 45,479 and the Nasdaq tumbled 3.56%, closing at 22,204.

Trump: “Starting November 1st, 2025, the United States will impose a Tariff of 100% on China, over and above any Tariff they are currently paying.”

Meanwhile, China’s Ministry of Commerce unveiled new rare earth export controls: any foreign exporter dealing in products with over 0.1% China-sourced rare earths or using Chinese extraction/magnet-making tech now needs an export licence. Controls on permanent rare earth magnets will kick in from December 1.

Trump says China’s move caught him off guard and insists the US is only responding. When asked if the US might lift tariffs if China backs down, he was noncommittal, saying it depends on future developments. He claims a good relationship with Xi Jinping but was blindsided. And he warned the US has plenty of tools beyond tariffs and software controls, including export controls on planes and parts.

Back in August, both sides agreed to suspend 24% tariffs for 90 days, a truce expiring November 9.

China gets tough: New export rules for rare earths—license needed if even 0.1% comes from China.

But tensions have been simmering. The US trade office targeted China’s maritime, logistics, and shipbuilding industries earlier this year and announced port fees on Chinese vessels starting October 14—violating international trade norms and agreements.

China Hits Back with Countermeasures

In response, China’s Ministry of Transport announced a “special port fee” on ships linked to the US starting October 14. The Ministry of Commerce emphasized these are fair defensive measures to protect competitive shipping and shipbuilding markets internationally.

According to Reuters, China has become the top shipbuilder worldwide over the past 20 years, and is now capable of commercial and military projects simultaneously. The US port fees are part of a wider push to revive American shipbuilding and curb China’s maritime strength.

Experts quoted by Reuters say China’s countermeasure shows the tariff truce is fragile at best.

A soybean trader noted China remains annoyed and likely won’t resume US farm imports soon. Despite that, agricultural trade impact may be limited as imports have already shrunk since the tariff war started. Bloomberg reported that after China’s announcement, global logistics reacted fast: some oil tankers canceled bookings to China, and charter rates for coal and iron ore carriers spiked.

Bloomberg also highlighted the massive impact of China’s port fee: RMB 400 per ton, or about $56, meaning a super-large crude carrier docking pays an extra $6.2 million each time. Analysts call this significant already.

Ship showdown: China slaps special port fees on US-linked vessels—fight fire with fire.

CNBC quoted Peter Alexander of Z-Ben Advisors saying the US made the first move, and China’s just returning fire — “just more tit-for-tat negotiating tactics. The US placed similar fees on Chinese-bound vessels and now China is doing th4 same.”

Who This Hits: Ships and Investors with US Ties

Jayendu Krishna, director at Drewry Shipping Consultants, said bluntly that the devil is in the details – if a vessel financed by a US company, listed on a US exchange or chartered by a US entity is deemed US-owned, the measure could have a significant impact.

Kun Cao, vice president of Reddal, told the Associated Press that China’s countermeasure is “not just a symbolic move” – the rule specifically targets any vessel with substantial ties to the US, whether in ownership, operation, flag or construction, and fees will ramp up with tonnage – “real bite is on US-owned and operated vessels”.

Bloomberg also noted that although many of the world’s largest tanker operators are not headquartered in the US, several are listed there and have major US shareholders.

Omar Nokta, an analyst at Jefferies Group, said the impact of China’s new fee should not be underestimated – it will affect listed companies, especially those with more than 25% of shares held by US-based investment funds.

Meanwhile, US shipping insiders say the American port fee announcement is still a “murky mess” with unclear rules and scope, leaving the industry confused.

Mao Paishou

** The blog article is the sole responsibility of the author and does not represent the position of our company. **

The South Carolina Republican stepped onto Fox News on March 8 boasting that a US-driven regime change in Iran would be "China's nightmare." American media fired back: China has already done the homework and it may even gain an advantage during geopolitical crises.".

US Republican Senator Lindsey Graham

Graham told Fox News that if America successfully overthrows the Iranian government, the operation would rank as "the best money ever spent." "Nobody," he declared, will "threaten [the US] in the Strait of Hormuz again" and Washington would install a "friendly" government in Tehran.

Strait of Hormuz

Graham then pivoted to China. "Venezuela and Iran hold 31% of the world's oil reserves," he said. Control that share, and America would "make a ton of money"—a scenario he called "China's nightmare." The math sounds seductive. The Washington Post wasn't buying it though. On March 13, the paper published a detailed rebuttal, arguing that after years of careful strategic planning, China is now more capable than most countries of weathering a prolonged surge in oil and gas prices.

The report notes that after years of planning, China is more resilient than most countries in facing prolonged oil and gas price spikes.

China's Multi-Layered Energy Fortress

Think of China's energy strategy as a multi-layered fortress. Massive crude oil reserves, a fast-growing electric vehicle industry, and enormous investment in coal, renewables, and energy storage all combine to give Beijing a commanding defensive position against supply shocks. As solar and wind projects multiply and new coal-fired plants come online, China's economy is running increasingly on domestic electricity—not imported fossil fuels.

The numbers back that up. China holds around 1.3 billion barrels of crude oil reserves—enough to weather six full months of Hormuz supply disruption. Its rapid buildout of coal-fired generation provides a robust backstop, keeping industrial output and grid stability intact even when import lines go dark.

About one-third of China’s energy consumption comes from electricity, and more than one-third of that is generated from solar, wind and hydropower.

Ben Cahill, an energy expert at the University of Texas at Austin, puts it plainly: China treats import dependence as a strategic vulnerability and has spent years building walls against it. Data from Columbia University's Center on Global Energy Policy confirms the payoff—roughly one-third of China's total energy consumption now comes from electricity, and more than a third of that electricity flows from solar, wind, and hydropower, mostly generated with domestic components.

China is in a leading position in the manufacturing and use of electric vehicles.

On the roads, the transformation is equally striking. Most new cars sold in China are now EVs, making it the world leader in both EV production and use. The International Energy Agency credits China's energy transition with avoiding an additional 1.2 million barrels of oil demand per day since 2019—structural savings that give Beijing lasting insulation from precisely the kind of supply shocks Graham is gleefully predicting.

Weaning Off the Hormuz Lifeline

Rush Doshi, Director of the China Strategy Initiative at the Council on Foreign Relations, brings a two-decade perspective. China has systematically reduced its reliance on seaborne oil imports, he notes. Crude flowing through the Strait of Hormuz now accounts for only 40–50% of China's total seaborne oil imports—down significantly from earlier levels.

The contrast with the US is stark. The Washington Post notes that America lags badly in renewable energy and EVs, with an aging power grid pushing electricity costs higher. President Trump's moves to block clean energy projects and slash renewable subsidies have further strangled the growth of wind and solar—leaving the US far more exposed to global oil shocks than its own hawkish rhetoric would suggest.

The irony runs deeper still. The very energy crisis Graham is celebrating could make China an even more attractive partner in renewable energy cooperation. Solar panel glass and grid storage equipment still rely partly on fossil fuels in their production—but China already holds a commanding position in clean energy innovation.

The current crisis may spur a global push for clean energy innovation—and China has already built a strong presence in this field.

American energy policy expert Sarah Ladislaw frames it succinctly: "The current crisis could accelerate the global search for clean energy innovation—and China is already ahead in that field." 

Jason Bordoff, founding director of Columbia's Center on Global Energy Policy, captures the emerging paradox head-on. "If you are, say, in Europe, you might not have wanted to increase your dependence on China for all the stuff you need for electrification, like critical minerals and batteries and solar panels," he says. "But in a world where now the oil and gas market looks pretty risky, too, increasing dependence on China for energy may start to look a little different."