Trade relations between the U.S. and China took a turn on October 10 after China released new regulations further restricting the export of rare earth minerals. U.S. President Donald Trump responded by threatening to impose an additional 100% tariff on all Chinese imports on November 1. President Trump also threatened to enact export controls on U.S. critical software products but did not specify which programs could be affected. Since then, both countries have walked back their comments and indicated plans for further negotiations. Trump and Chinese President Xi Jinping plan to meet in person for trade talks on the sidelines of the Asia Pacific Economic Cooperation (APEC) forum planned from October 31 – November 1.
Amid Chinese moves to increase control over the rare earth industry and other sectors, the U.S. and the European Union have proposed new measures to prevent Chinese industry dominance. U.S. Treasury Secretary Scott Bessent announced that the Trump administration is considering more aggressive measures to control American companies in seven unspecified strategic sectors for national security reasons. These measures could include the U.S. government purchasing stakes in relevant companies or implementing price floors for strategic goods. Amid similar concerns, the E.U. is also considering a proposal to require Chinese companies investing in the E.U. to transfer some technology to local companies. The measure would also require Chinese companies to use a set percentage of E.U. goods or labor and to add value to the products at facilities in the E.U. The proposal remains under consideration, and no finalized policy has been agreed on.
China announces retaliatory fees on U.S.-affiliated vessels as U.S. moves forward with port equipment tariffs
Trade tensions between China and the U.S. further escalated after the U.S. implemented its plan to enact fees on Chinese- built and operated ocean vessels on October 14. In response, China released retaliatory measures the same day, enacting tit-for-tat fees on U.S.-built, owned, or operated vessels. Ships built by China but owned or operated by U.S. companies were exempted.
China also sanctioned six U.S.-based subsidiaries of South Korean shipbuilding company Hanwha Ocean Co., Ltd. for aiding the U.S. investigation into Chinese shipbuilding practices. The American and Chinese port fee measures have already begun restricting global ship supply as ocean logistics companies rotate Chinese-built vessels away from the U.S. and vice versa, and may ultimately be forced to increase shipping rates. While many types of vessels are affected by American port fees due to Chinese dominance of the global shipbuilding industry, shipments using American tanker ships and bulk carriers of goods including oil, gas, chemicals, and agricultural products are especially affected by the Chinese restrictions.
Additionally, the U.S. will move forward with 100% tariffs on ship-to-shore cranes, ocean cargo handling equipment, intermodal chassis, and chassis parts manufactured in China or by a Chinese-owned company, as well as products with components manufactured in China. The policy will become effective on November 9 and was enacted as part of the investigation that prompted U.S. port fees on Chinese-affiliated vessels. The U.S. Trade Representative’s Office also continues to investigate potential 150% tariffs on imported rubber tire gantry cranes, rail mounted gantry cranes, automatic stacking cranes, terminal tractors, straddle carriers, top loaders and corresponding parts.
U.S. continues negotiations with various countries following reciprocal tariff enactment
After President Trump and Canadian Prime Minister Mark Carney met in Washington, D.C. for bilateral talks, the U.S. and Canada appear to be making progress towards a trade deal. Prime Minister Carney and President Trump are likely to meet again at the Asia-Pacific Economic Cooperation summit. Prime Minister Carney hinted that a deal could come before the summit, but nothing has been confirmed at the time of writing.
Additionally, negotiations have continued between the U.S. and India. According to President Trump, India has agreed to gradually halt purchases of Russian oil products. Reports indicate that U.S. tariffs on India could ultimately be lowered to 15-16% from the current rate of 50%. The agreement may be announced at the upcoming Association of Southeast Asian Nations (ASEAN) summit scheduled from October 26 – 28.
Talks between the U.S. and South Korea to finalize the two countries’ reciprocal tariff agreement continue. President Trump will make a diplomatic visit to South Korea from October 29 – 30, ahead of the APEC forum on October 31, during which he is expected to discuss the trade deal with South Korean officials. The main remaining issue is the terms of South Korea’s $350 million (€301 million) investment pledge in the U.S., a term of the established deal framework.
Lastly, negotiations with Brazil also continue to make progress. President Trump and Brazilian President Luiz Inácio Lula da Silva may meet at the ASEAN summit to discuss reducing U.S. tariffs on Brazil following an earlier call between the two leaders.
U.S. threatens new tariffs on Spain, Colombia and Nicaragua amid political disagreements
On October 15, President Trump threatened to raise U.S. tariffs on Spain by an unspecified amount. The threat is due to Spain declining to increase funding for the military up to levels required by the North Atlantic Treaty Organization (NATO). It is unknown when any new tariffs could come into effect.
In separate measures, the United States threatened new tariffs on Colombia and Nicaragua. After President Trump accused Colombia of failing to resolve issues related to drug trafficking, he threatened to raise tariffs on Colombia from the current rate of 10% to an unspecified amount, in addition to threats to withhold economic aid. Major Colombian exports to the U.S. include agricultural products such as coffee, bananas, limes and avocados.
Additionally, the United States Trade Representative’s Office has proposed to add new tariffs of up to 100% on Nicaragua, or alternatively to withhold participation in unspecified provisions of the Central America-Dominican Republic Free Trade Agreement. The proposal is due to alleged labor and human rights abuses in Nicaragua, which is a major exporter of textiles and automobile electrical harnesses to the U.S. The U.S. currently charges an 18% tariff on Nicaraguan goods. It is unknown when a final decision is likely on either of these tariff threats.
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