Posted on 10/18/2025 8:45:18 PM PDT by SeekAndFind
President Trump and President Xi Jinping are locked in a fresh trade war standoff—and Beijing is betting the U.S. stock market will blink first. China’s escalating economic retaliation is timed with precision, and the message is clear: Xi believes Trump won’t risk another market meltdown. That assumption could shape every policy move over the next few weeks and shift investor sentiment worldwide.
From rare-earth sanctions to new export controls and shipping-related penalties, China is tightening the screws just as President Trump threatens 100% tariffs on Chinese goods. Meanwhile, both countries prepare for a high-stakes summit later this month in South Korea, where global investors hope for a fragile truce.
This isn’t just political posturing. These actions carry real consequences for equities, commodities, tech supply chains, and the trajectory of interest rates. If you have exposure to global markets, multinational firms, or anything reliant on Chinese manufacturing or rare-earth minerals, this battle is already on your doorstep.
According to sources close to China’s leadership, President Xi is playing hardball because he believes Trump is too beholden to market sentiment. The thinking in Beijing is simple: if tariffs cause the stock market to tank, Trump will retreat, just as he did in May after rare-earth tariffs spooked Wall Street.
“It is precisely China’s belief that Trump will fold—as he appeared to do on magnets earlier this year—that has led them to massively escalate,” said Rush Doshi, a scholar at Georgetown University and former Biden administration official.
This strategy assumes the U.S. economy is already vulnerable. Rising prices, slowing hiring, and contraction in manufacturing have exposed soft spots that Beijing aims to exploit. Last week’s announcement restricting rare-earth exports triggered a swift negative reaction in U.S. markets. China sees that as proof its strategy is working.
Beijing’s decision to restrict exports of rare-earth minerals, critical for everything from smartphones to military hardware, is the economic equivalent to going nuclear. China controls over 80% of global rare-earth refining capacity. Losing access even temporarily could disrupt tech supply chains and defense contractors.
The last time China wielded this weapon in full was during a diplomatic conflict with Japan in 2010. It worked. Tokyo backed down.
Now, the U.S. is the target. Beijing is signaling it can strike at the heart of America’s tech and defense industries if necessary.
Trump has long measured the success of his economic policies by stock market performance. From tax cuts to deregulation, Wall Street rallies have been central to his narrative. But that reliance cuts both ways.
When markets falter in response to his aggressive trade moves, Trump often softens. Investors saw this during the first trade war with China in 2019 and again in May 2025. Now, markets have once again become the battleground.
“We are the most successful we have ever been as a country,” Trump said Tuesday, attempting to project strength amid signs of strain.
But Beijing is watching every point drop on the S&P 500 and betting Trump’s pain threshold is lower than it looks.
In response to China’s moves, Trump is threatening 100% tariffs on Chinese imports starting November 1. He’s also floating the idea of “terminating business” with China on select goods like cooking oil and other trade elements, particularly in retaliation for China halting U.S. soybean purchases.
While these announcements play well with economic nationalists, they risk blowback on American companies that rely on Chinese inputs or have global exposure.
Markets plunged early Tuesday after Beijing sanctioned the U.S. units of Hanwha Ocean, a Korean shipping company operating in American waters. Though major indexes later recovered, the incident served as a warning: this standoff is highly combustible, and volatility is back.
Here’s where the U.S. economy stands as the trade war heats up:
| Indicator | Latest Reading | Trend |
|---|---|---|
| Consumer Price Index (YoY) | +3.8% | Rising |
| ISM Manufacturing PMI | 48.2 | Contracting |
| Unemployment Rate | 4.1% | Slightly Up |
| Consumer Sentiment (U. of Mich) | 65.4 | Falling |
Source: Bureau of Labor Statistics, ISM
A prolonged tariff war would likely worsen these metrics. Higher import costs could push inflation up. Consumer confidence might fall further. And global firms may delay hiring or capex decisions.
Potential Winners:
Potential Losers:
The next inflection point is the Asia-Pacific summit in South Korea later this month, where Trump and Xi are expected to meet. Analysts expect few breakthroughs.
“The meeting will be the message. There will not be major breakthroughs,” said Ryan Hass of the Brookings Institution. “Xi will want to use the meeting to project greater stability and predictability. Trump could look for assurances on flows of rare-earth elements.”
Some are predicting a short-term extension of the May truce, which helped cool tensions previously. But without structural concessions, such pauses are just smoke breaks in a drawn-out economic brawl.
U.S. Ambassador to China David Perdue is reportedly trying to arrange a phone call between Treasury Secretary Scott Bessent and his Chinese counterpart He Lifeng. Officials on both sides are still talking, despite the headlines.
“Senior officials in Washington and Beijing had discussions about the latest trade tensions on Monday… both sides will be able to work through it,” U.S. Trade Representative Jamieson Greer told CNBC.
Still, markets aren’t counting on a handshake. Risk premiums are creeping back into Chinese ETFs, and the VIX (Volatility Index) jumped 15% over the past week.
This is a headline-driven environment. Use options to hedge short-term exposure. Avoid chasing breakouts in trade-sensitive sectors.
Stocks tied to rare-earths and high-end manufacturing are directly in the crossfire. Identify alternative suppliers or those investing in domestic extraction.
Don’t assume today’s tariffs will be tomorrow’s reality. The Trump administration has a pattern of walking back threats when markets react negatively.
Market dips from trade headlines may offer long-term entry points into quality names that are unfairly punished in the short term.
The playbook is familiar, but the stakes are higher. In 2019, trade wars were a risk to growth. In 2025, they are a risk to stability.
Trump’s messaging may be strong, but markets are showing signs of fragility. Xi’s move to escalate—even amid China’s own economic troubles—signals a long game. He’s betting the U.S. election cycle and market fragility will push Trump to blink first.
For investors, that means preparing not for resolution, but for turbulence.
How can you tell if the Chicoms are blinking?
“How can you tell if the Chicoms are blinking?”
LOL!
Also, this article is on the negative side. Walmart said they are using less from China. Others have seen this coming and started making adjustments months ago.
Plus, a lot of the stuff coming out of China is crap and people don’t need new iphones and computers every year.
Confiscate all the land the CCP has purchased here, especially millions of acres of Oregon forest land.
Screw Xi and his stale fortune cookies.
I don’t. Buy this article. This is not a trade war . This is a ccp. Party in fighting That will likely be resolved. When the elites meet. Later this month
You mean ‘brinking’.
In 2019, trade wars were a risk to growth. In 2025, they are a risk to stability.
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That’s from the article and it is white washed. The word stability is not the correct word.
If you had a monopoly on products, a monopoly guaranteed to exist for at least 10 years, and those products were absolutely required for modern society to exist, and the primary party desiring these products has a history of trashing you, for decades, -— what would you do?
Don’t digress into who has a white hat and who has a black hat. What would you do to optimize on your monopoly?
My guess is this. It’s not about money. They can create all the money they want from the People’s Bank of China, just like the Fed did in 2009 QE.
It’s about society. It’s about role and position in the world.
Why not make the products available to deserving BRICs companies and make it clear if there is any evidence the metals are forwarded to the US, they, too, will be cut off. Why would that not be a good approach?
Bottom line, what would you do if you had such an overwhelming monopoly?
They have the cards. 🃏
if anything, I blinked, I was holding 10 contracts of ABAT@$5 Call Options with 17 Nov exp, at +600%. it was
greed that I didn’t sell. and i think i might be out of the money.
Red China has an advantage here. Unlike DJT they don’t have to worry about pesky things like domestic discontent or elections.
Rare earth minerals are not rare. It is just that it takes open pit mining to extract the minerals and western nations sub-contracted that out to China where they don’t have environmentalist blocking the mines. Declaring the need to have our own source for rare earth minerals as a national defense need, many if not all environmental objects can be overcome. The US already has at least one rare earth mine and there are plans for more. Within two years the US may become an exporter of rare earth material leaving China with nothing to bargain with.
Unless I'm mistaken, that's already been done.
I don't think the mining per se is the principle source of the material backlog, it's setting up and scaling the refining operation. What I'm wondering is why other nations haven't raced to set up their own supply resources. In any case, investing in a domestic mining concern looks like a solid option.
I don’t think the mining per se is the principle source of the material backlog, it’s setting up and scaling the refining operation. What I’m wondering is why other nations haven’t raced to set up their own supply resources. In any case, investing in a domestic mining concern looks like a solid option.
—
Thank you for the correction. It has been awhile since I looked into “rare earths” and so my note was from memory. I knew it was under consideration I did not know it had been done.
Bottom line, you’re a TROLL.
So what would you do with such a monopoly?
Punc.Tuation.
Bow to the GEOTUS, Troll.
Another market meltdown?
Which first market meltdown are they talking about?
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