China Widens Rare Earth Controls as Trump Threatens 100 Percent Tariff

China expanded its rare earth export controls on October 9, adding five more elements to its licensing list and extending the rules to products made anywhere in the world with Chinese minerals or Chinese technology. President Donald Trump answered a day later with a threat to add a 100 percent tariff on Chinese goods from November 1. On October 14, both countries began charging new fees on each other's ships.

What the new controls do

The Commerce Ministry added holmium, erbium, thulium, europium and ytterbium. Twelve of the 17 rare earth elements now sit under export restrictions, and dozens of pieces of refining and processing technology joined the control list.

Foreign companies are pulled in directly. A producer outside China now needs a Chinese export licence if its product contains Chinese rare earths above 0.1 percent, or was made with Chinese equipment, materials or technology, even when no Chinese firm is part of the deal. That rule takes effect December 1. The curbs on the five new elements and on processing equipment take effect November 8.

Overseas defence users will not be granted licences, and applications tied to advanced semiconductors will be approved case by case. The rules cover chips at 14 nanometres or more advanced, memory chips with 256 layers or more, the equipment used to make them, and artificial intelligence work with potential military uses.

China mines about 70 percent of the world's rare earths and produces more than 90 percent of processed rare earths and magnets, metals that end up in electric vehicles, aircraft engines, military radars and phones.

Washington answers

A White House official told Reuters the rules were announced without notice, in an apparent effort to exert control over the world's technology supply chains. On October 10, Trump said the US would add a tariff of 100 percent on Chinese goods from November 1, "over and above any Tariff that they are currently paying," with US export controls on "any and all critical software" from the same date. He called China's move extraordinarily aggressive and "absolutely unheard of in international trade."

Markets moved the same day. The S&P 500 fell 2.7 percent, its worst day since April, and the Nasdaq fell 3.6 percent. Rare earth shares ran the other way: Critical Metals jumped 25 percent in New York, USA Rare Earth rose 15 percent, and Chinese producers China Northern Rare Earth and Shenghe Resources climbed 10 and 9.4 percent.

Port fees open a second front

On October 14, US port fees on China-linked ships took effect. Chinese-owned or operated vessels pay 50 dollars per net ton, a rate set to rise over the next three years.

China answered in kind the same day. Its transport ministry charges US-linked ships 400 yuan, about 56 dollars, per net ton, covering ships owned or operated by US companies or individuals, entities with US stakes of 25 percent or more, and every US-flagged and US-built vessel. The rate is charged at the first Chinese port of call and climbs each April 17, reaching 1,120 yuan in 2028. Beijing called the US fees discriminatory and a violation of international trade principles and the two countries' maritime agreement.

Where it stands

Over the weekend, China's Commerce Ministry said its position was consistent: Beijing does not want a tariff war, but it is not afraid of one. It urged Washington to settle the differences through talks and warned of corresponding measures if the US went ahead.

On October 15, Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer faced reporters together. Greer called the controls a "supply chain power grab." Bessent said: "This is China versus the world." The US and its allies would not be commanded or controlled, he said, nor let "a group of bureaucrats in Beijing manage the global supply chain." Washington is lining up a group response with European allies, Australia, Canada, India and the Asian democracies. Bessent also said China seemed open to discussion and the current tariff pause could be extended. The 90-day truce expires in early November, days after Trump's deadline.

Key numbers

• 12 of 17: rare earth elements now under Chinese export controls
• 0.1 percent: Chinese content threshold that pulls foreign-made products into the licensing rules
• 100 percent: additional US tariff threatened from November 1
• 2.7 percent: S&P 500 fall on October 10
• 400 yuan: China's port fee per net ton on US-linked ships from October 14
• December 1: date the rule covering foreign-made products takes effect