US-China trade war escalates, Trump slaps additional 100% tariffs

TOI correspondent from Washington: The trade war between the US and China dramatically escalated this week, reaching a new and alarming phase after tit-fortat export controls that rattled markets even as they were closing on Friday.Barring a pullback by both sides over the weekend, more pain is expected when markets re-open Monday, after a staggering $1.6 trillion was wiped out of the stock market when US President Donald Trump announced retaliatory measures against Beijing’s move to squeeze supply of critical technologies, including rare earths processing, on which it has a stranglehold.Who fired the first shot is a matter of perspective. The US has long weaponised its headstart on technology advances in areas like semi-conductors to punish adversaries (like China and Russia) and even deny it to purported friends (like India). On Thursday, Beijing signalled it has come of age and two can play the game by adopting similar means in areas where it has stolen a march over Washington.China’s ministry of commerce issued four announcements that, collectively, impose new licensing requirements on three critical global supply chains from Nov 8. They include rare earths and processing technology, where the controls will now go beyond minerals to include the specialised machinery and technical knowhow needed to process them into rare earth elements vital for everything from defence systems such as missiles and drones to EVs. For industrial super-hard materials controls were extended to synthetic diamonds and cutting tools used ubiquitously in high-precision manufacturing, including for cutting silicon wafers for computer chips.In addition, controls were placed on high-performance batteries and equipment, with new restrictions targeting lithium-ion batteries used in long-range electric vehicles and advanced drones, as well as the factory equipment necessary for their manufacture. Export controls were also placed on graphite anodes and cathode materials, the essential electrodes for batteries, and equipment to make them.Beijing said the moves are necessary to “safeguard national security and interests” and prevent “dual use”, echoing the rationale the US used for its own export controls on advanced semiconductors.Hours after the Chinese move, Trump condemned the measures as a “hostile order” and announced a staggering economic countermeasure, declaring the US would impose an additional 100% tariff on all Chinese goods, on top of existing duties from Nov 1. White House also announced new export controls on “any and all critical software”. The office of the US trade representative said the president is “responding forcefully and appropriately to safeguard America’s economic and national security”, accusing Beijing of “ordering the entire world to submit for approval to the Chinese Communist Partycontrolled govt any export containing rare earths processed or mined in China”.However, experts are divided on who started the trade scrap, with even many Western analysts suggesting it is Washington that has been picking fights, including expanding its entities list, in an effort to constrain China’s rise. Just this week the US added 15 Chinese companies to its restricted trade list, targeted China-based refineries buying Iranian oil with new sanctions, and announced new port fees on Chinese-made freight vessels beginning Oct 14.Some experts feel China’s “all-in” move on export controls is a direct response to this prior US pressure, seeking to demonstrate its own powerful leverage. Rush Doshi, a former national security council official, believes the timing of China’s move — weeks before a planned meeting between Trump and Xi at APEC summit — indicates Beijing believes the US “will fold” without a strong retaliatory play.Not if you believe Trump, derided with the acronym TACO (Trump Always ChickensOut). “For every element that they (Chinese) have been able to monopolise, we have two. I never thought it would come to this but perhaps, as with all things, the time has come,” he said in a post on Truth Social.