Trump Says Additional 100% China Tariff, New Export Controls Start Nov. 1

Later in the day, after the markets closed, Trump posted again, saying that starting Nov. 1, or sooner, if China escalates the trade war before then, "the United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying. Also on November 1st, we will impose Export Controls on any and all critical software."

He said that the action was in response to China's decision to "impose large scale Export Controls on virtually every product they make, and some not even made by them." Trump said those changes start Nov. 1; they actually start Dec. 1.

China first restricted rare earth magnets in the spring after U.S. tariffs hit 145%; it dropped most restrictions in June, and the U.S. also rolled back some export restrictions and dropped tariff levels (see 2506110044).

Think tank observers and politicians had differing theories for why China imposed the expansive export controls. Many assumed that this was a reaction to a new rule from the Bureau of Industry and Security that imposes stringent export licensing requirements on majority-owned affiliates of entities added by BIS to certain restricted party lists (see 2510030041).

Peterson Institute for International Economics fellow Martin Chorzempa wrote on X that the BIS rule "will go down as major miscalculation," as he said the administration believed China wouldn't "retaliate hard."

He said the U.S. rule does address a real problem "but is escalatory & upends tons of non-sensitive exports to China."

Rep. Gregory Meeks, the top Democrat on the House Foreign Affairs Committee, tweeted, "China’s export controls didn’t 'come out of nowhere.' They are retaliation for Trump’s reckless trade war where he used American export controls as negotiating leverage. Trump’s actions are resulting in expensive consequences for American families."

The American Enterprise Institute's Derek Scissors said in a telephone interview that many assume China's reaction is responding to the BIS 50% rule, but he thinks it's actually in response to the fees on Chinese ships making calls at American ports. He said that China wanted to dominate commercial shipping, not just be the largest player, and the Section 301 fees will make that impossible.

The Office of the U.S. Trade Representative made changes to those fees late on Oct. 10.

Scissors said that Trump's first post, which said there would be no sideline meeting with China's President Xi Jinping in South Korea, as had been planned, is no loss for China.

"The Chinese don’t particularly want to meet with Trump," Scissors said. "They see it as risky, given Trump’s unstable temperament."

Scissors said he doesn't have the same insight into Trump's decision-making as he did in the first term, because it's less common that administration officials are calling him and asking for advice. Still, he said, the time he saw Trump angriest at China was when he thought the phase one trade deal was going to fall apart in the summer of 2019. He said back then, Trump was saying he was going to use the International Emergency Economic Powers Act "and force all firms to leave China."

Scissors said China isn't able to enforce foreign direct product rule-like restrictions as well as the U.S. can because its customers have less transparent supply chains, and because it doesn't have the reserve currency. But that doesn't mean it will never be able to choke off supplies.

"By December 1, 2027, we might have a serious problem," he said, noting that Beijing could get better at enforcing the new rules, which take effect Dec. 1, 2025, after a couple of years of implementing them. China is dominant at the beginning of the supply chain for medicines -- supplying many of the key starting materials that are made into active ingredients, he noted.

Scissors said that among importers who source from China, "you have a double-sided threat."

Speaking before Trump's announcement of 100% tariffs, he said the U.S. could hike tariffs again, "because that’s Trump’s answer to everything." He added, "You now have China-side risk," as China might target your sector as an area where it will throttle exports.

He said companies should evaluate if the product they are buying is available from other countries, but just costs more, or if China has a choke point in the supply chain, or whether there isn't enough supply outside China to fill the orders.

In that case, you could be in trouble, he said. "Maybe I’m 18th on the target list, and I’m safe, but maybe I’m third."

He said that publicly listed companies are likely prepared for these sorts of problems, but many small companies may not know where Chinese goods could be deep in their supply chains.

"We should have been taking actions to protect against this for years," he said.

Scissors says it would be foolish to trade concessions in exchange for China backing away from its foreign direct product rule-like restrictions.

Trade analyst Marius Risse sounded the same caution in an essay posted by the Washington International Trade Association. "The takeaway for global industries is that these controls are not temporary disruptions, but a permanent feature of the new competitive landscape. The question is no longer if China will use these powers, but how and where it will apply them next."