Mint Explainer | Why China and the US are ratcheting up their trade war again
A fresh escalation in US-China trade tensions threatens global markets. Mint breaks down what triggered the latest moves, the status of trade talks, and implications for India.
China and the US are at it again, threatening each other with tariffs and other punitive measures. Mint delves into the latest escalation in their ongoing trade war, what triggered it, the progress of China-US trade talks, and what it could mean for economies like India.
1. What triggered the latest spat?
The answer depends on whom you ask. The US points to China’s new export controls on rare earth minerals, imposed on 9 October. President Donald Trump called the move “extremely hostile" and threatened to levy an additional 100% duty on Chinese imports from 1 November, alongside export controls on critical software.
China, meanwhile, says its actions were in response to the US expanding the Entity List, restricting China’s access to advanced semiconductor chips. Beijing also cited US-imposed additional fees on Chinese vessels docking at US ports.
2. Is shipping fees a new front in the trade war?
Yes. From 14 October, the US began charging extra fees on ships linked to China—those owned, operated, or built by the country. Washington frames this not as a trade war but as an effort to revive the US shipbuilding industry and loosen China’s grip on global shipping.
China, however, sees it as another front in the trade conflict and has retaliated with tariffs. Given that China accounts for 53% of global ship production, compared with 0.1% for the US, the move could hit Beijing harder than Washington.
3. What is the current status of the US-China trade talks?
Months of negotiations produced a temporary truce that spared the world’s two largest economies from the triple-digit tariffs imposed earlier this year. That truce has been extended multiple times, but the recent flare-up threatens to derail it.
China has indicated it will match every US move. Some experts, however, see these actions as strategic posturing ahead of a potential meeting between Trump and Chinese President Xi Jinping later this month at the Asia-Pacific Economic Cooperation (APEC) Summit in South Korea. China still holds a key leverage: soybeans.
4. What about soybeans?
Until recently, China was the largest importer of US soybeans. But it has stopped buying from the US and turned to Brazil and Argentina.
American soybean farmers—many of them Trump supporters—face substantial losses. Trump is eager to get China back to the US market, but Beijing is likely to make resuming imports contingent on the trade deal.
5. Is a US-China trade deal possible in South Korea?
Trump is bullish, predicting a “fantastic" deal for both the nations and the world.
Experts are more sceptical, doubting a comprehensive deal will emerge in 2025. At best, they anticipate another truce: the US could ease some semiconductor restrictions, China might relax rare earth export limits, port fees could be mutually reduced, and China may resume US soybean purchases if it perceives a favourable deal.
6. How does all this impact India?
India, amid its own trade negotiations with the US, may find opportunities in the latest escalation.
The US is seeking alternative markets for soybeans and maize, and India could open greater access for these commodities to meet domestic demand. Conversely, if the US imposes the threatened 100% tariff on China, a surge of cheaper Chinese imports could flood India and global markets, harming domestic industries and export prospects.
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