The recent escalation of trade tensions between the United States and China has increased anxieties among global investors, with Wall Street facing a sharp sell-off.
On Tuesday, US Trade Representative Jamieson Greer spoke with CNBC and said that the recently announced 100% tariffs on China depend on Beijing’s next move.
The development has major significance as it conveys that the tariffs on China are not final and can both increase or decrease as per the reaction of the Asian giant.
While emphasising the delicate situation, Greer added:
We can’t have a situation where the Chinese keep this regime in place, where they want to have veto power over the world’s high-tech supply chains.
What’s behind recent US-China tensions?
The latest tensions between the United States and China began when both sides started slapping each other with new charges and restrictions on key materials.
China hit US ships with fresh port fees and tightened export rules on 12 out of 17 rare earth metals and refining equipment, pointing fingers at what it calls Washington’s “discriminatory” maritime policies and earlier tech export limits.
Not to be outdone, President Trump threatened to bring back 100% tariffs on Chinese goods and revive strict trade barriers, moves that could derail the planned summit with Xi Jinping in South Korea.
Even so, US Treasury Secretary Scott Bessent is still hoping dialogue can continue.
This flare-up comes after the US rolled out its “affiliates rule” in late September, which extended export controls to foreign subsidiaries of blacklisted Chinese companies, impacting thousands of firms.
Beijing sees this as breaking a May 2025 truce brokered in Geneva, a move that signals bad faith. China’s rare earth restrictions, crucial for things like semiconductors, EVs, and defense tech, are seen as a countermeasure.
In return, the US imposed new tariffs on Chinese timber, furniture, and cabinetry, making things even tenser.
Analysts point out that both sides are now using what they once criticized in the other, “long-arm jurisdiction” tactics, showing just how deep the strategic rivalry has become.
Financial markets aren’t taking it lightly either, with worries about global supply chains and AI development if key minerals get harder to access.
Bloodbath on Wall Street
Wall Street plunged sharply on Friday after President Donald Trump announced a 100% tariff on Chinese imports starting November 1, intensifying trade tensions.
The S&P 500 and Nasdaq experienced their largest single-day percentage drops since April, with major tech stocks like Nvidia, Tesla, and AMD falling over 2%.
The sell-off wiped out about $2 trillion in market value, reflecting fears of a full-scale trade war and disrupted supply chains.
On Monday, markets rebounded strongly following Trump’s softer tone on trade, with the Dow rising 1.3%, the S&P 500 up 1.56%, and the Nasdaq gaining 2.21%.
The rally was led by tech and AI stocks as investors gained hope for thawing tensions.
However, on Tuesday, renewed trade friction caused by Chinese sanctions and export restrictions triggered another sharp sell-off.
The Dow dropped 504 points, the S&P 500 fell 1.3%, and the Nasdaq sank nearly 2%, with tech shares again leading losses amid ongoing geopolitical uncertainty.
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