China warned it would retaliate if Donald Trump follows through on a threat to impose 100% tariffs on Chinese imports, escalating tensions between the world’s two largest economies. Trump issued the threat after Beijing suddenly imposed strict export controls on critical raw materials, a move that reignited a long-running trade conflict and sharpened concerns over global supply chains. The exchange raised the stakes for industries that rely on Chinese inputs, including electronics, automotive and clean energy, and prompted fresh questions about inflation risks and the outlook for global growth. Markets and businesses now face renewed uncertainty as both sides signal tougher measures and a willingness to test the limits of trade rules and existing supply lines.
Context and timing
Chinese officials issued the warning on Monday in Beijing, hours after Trump threatened a sweeping 100% tariff on Chinese goods. The threat followed Beijing’s decision to tighten export controls on critical raw materials. The move revived tensions that date back to the 2018–2019 tariff battles and comes as companies and governments reassess dependence on key inputs that China supplies.
Beijing’s controls revive a familiar fault line
Beijing’s export controls target critical raw materials that feed advanced manufacturing and clean energy supply chains. China plays a dominant role in processing and refining many of these inputs. This list includes rare earth elements, battery-grade graphite, and specialised metals used in semiconductors and high-performance electronics. Industry data show that China handles a large share of rare earth processing worldwide and dominates the production of anode-grade graphite used in electric vehicle batteries.
Officials in Beijing have previously used export licensing and permit regimes to manage outbound flows of strategic inputs. Past measures covered gallium and germanium, which producers use in chip-making and telecoms hardware, and graphite, which battery makers need for anodes. These controls can tighten availability and raise costs for manufacturers outside China. The latest move signals that Beijing continues to tie resource policy to wider industrial and geopolitical aims, especially as global competition intensifies in high-tech sectors.
What a 100% tariff could mean for prices and trade
A 100% tariff on Chinese imports would double the landed cost of targeted goods, unless importers absorb the hit. Retailers and manufacturers would likely pass on at least part of the increase, which would put fresh pressure on prices for consumer electronics, household items, tools and intermediate parts. Businesses with thin margins and limited supplier options would face the hardest choices, either cutting costs elsewhere or raising prices to stay afloat.
The US already carries tariffs on a wide array of Chinese products that date back to the earlier trade war. Those measures included duties up to 25% on roughly $370 billion of goods at the time. A move to 100% would mark a dramatic escalation. Analysts warn that such a sweeping step would disrupt established supply chains, invite immediate countermeasures from Beijing and ripple through global logistics networks. The effect on inflation would depend on the breadth of coverage, the availability of substitutes and how quickly firms can shift sourcing.
How China could hit back
China can respond in several ways. It can raise tariffs on US goods, expand its own export controls, or add new licensing hurdles for sensitive materials. It can also step up regulatory checks on US brands that operate in China, slow approvals or favour domestic suppliers in procurement. In the 2018–2019 rounds, Beijing targeted US farm exports, including soybeans, and directed state buyers to shift orders. Those steps sought to apply pressure on key constituencies while insulating strategic industries at home.
China also controls important choke points. It dominates the processing of several minerals that underpin the energy transition, including rare earths and battery materials. Any move to curtail exports of such inputs would test the resilience strategies that many manufacturers have tried to build in recent years. Companies hold larger inventories and seek alternative suppliers in places such as Southeast Asia, Australia and Africa, but they still rely on Chinese refining at scale. A tit-for-tat cycle would likely slow those diversification plans and raise costs along the way.
Trade rules and diplomatic risks
Trade lawyers note that broad, across-the-board tariffs raise questions under World Trade Organization rules. The WTO sets bound tariff rates, and members usually keep duties within those ceilings except under specific legal justifications. A unilateral jump to 100% would trigger legal challenges and further strain a rules-based system that already faces pressure. While many countries have tested those limits in recent years, a move of this magnitude would draw intense scrutiny.
The dispute also intersects with a broader strategic rivalry. The US and its partners have tightened export controls on advanced chips and chipmaking tools. Beijing has responded with measures that target inputs lower in the supply chain. Both sides say they seek resilience rather than full decoupling, but actions on both fronts continue to pull supply lines apart. Escalation risks overshadow attempts to stabilise relations through high-level talks, military hotlines and working groups on trade and technology.
Global markets and allies brace for fallout
Investors track developments for signs of spillover into global markets. A tariff shock and a tightening of export controls would hit sectors tied to consumer electronics, automotive components and renewable energy equipment. Europe and key Asian economies rely on Chinese inputs and US demand, so they would feel any squeeze quickly. Policymakers in those regions have championed “de-risking” and now face a sharper test of that strategy.
Allies also worry about the energy transition. Clean energy supply chains run through China at multiple stages, from refining to component assembly. Industry studies indicate that China refines more than half of the world’s battery metals and processes the