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Tag: US-China Trade War

  • Pentagon Flags Alibaba and BYD Over Alleged Chinese Military Links

    Pentagon Flags Alibaba and BYD Over Alleged Chinese Military Links

    The addition of Alibaba to the Pentagon list is one of the highest-profile changes. (Bloomberg)
    The addition of Alibaba to the Pentagon list is one of the highest-profile changes. (Bloomberg)

    The Pentagon has concluded that Alibaba and BYD should be added to a list of companies with alleged connections to the Chinese military, two months before Donald Trump is expected to meet Xi Jinping in Beijing.

    The defence department posted an updated “Chinese Military Companies” list to the Federal Register on Friday morning. However, in a move that has led to confusion, the PDF was abruptly removed from the site following a request from the Pentagon, which did not provide any explanation. A defence official said the Pentagon would release the new list next week.

    The decision to include Alibaba on what is formally known as the 1260H list comes three months after The Financial Times reported that US intelligence agencies believed the ecommerce giant posed a threat to national security.

    The Pentagon will also add BYD, the world’s biggest electric-car maker, and Baidu, the search engine, to the 1260H list, which is mandated by Congress. While US-China trade tensions have eased since Trump and Xi met in South Korea in October, the addition of the marquee Chinese groups to the list will trigger fresh tension ahead of their summit in April.

    In another point of friction, The Financial Times reported last week that the Trump administration is compiling a package of arms sales for Taiwan which could total $20bn after announcing a record $11.1bn package in November. Craig Singleton, an expert on US-China relations at the Foundation for Defense of Democracies think-tank, said the addition of the Chinese companies to the list was “mutually assured disruption in practice”.

    “Even as tariff threats have cooled, tech, capital and security frictions keep heating up,” he said. “Releasing the list weeks before a leader-level summit shows deliberate compartmentalisation: stabilising trade talks while sustaining pressure in national security lanes.” Henrietta Levin, a US-China expert at the CSIS think-tank, said Beijing would be upset but the move was unlikely to derail the Trump-Xi summit.

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    “Chinese officials may lament how the administration is not doing enough to foster a ‘positive atmosphere’ ahead of the anticipated summit between Trump and Xi this spring,” Levin said. “But ultimately, Beijing is confident the results of this summit will favour Chinese interests, and they will not want to miss the opportunity to extract concessions from Trump.”

    When the Pentagon makes a “Chinese Military Companies” designation, it signals that the US believes the groups have direct ties to the People’s Liberation Army or are involved in China’s military-civil fusion programme, which requires them to share technology with the Chinese military.

    Inclusion on the Pentagon list does not have legal implications for most of the companies. But it creates reputational risk for them, particularly because it signals that the US may take punitive action in the future.

    However, the Pentagon also put Chinese biotechnology company WuXi AppTec on the list, which will affect its operations in the US. Under the Biosecure Act, which was passed in December, the federal government is restricted from doing business with “biotechnology companies of concern”, which includes any entity on the 1260H list. But the act gives the government a five-year window to complete existing contracts and wind down arrangements with designated companies. The Pentagon does not publicly disclose many details about why a company has been added to the list.

    But the China committee in the House of Representatives last year called for WuXi to be added, saying its management committee included members of the PLA’s Academy of Military Medical Sciences and PLA-run hospitals. WuXi AppTec contested its inclusion on the list. “We are not owned, controlled, or affiliated with any Chinese government agency or military institution. None of our board members or senior executive team has Chinese military or political party affiliation either,” the company said.

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    The Pentagon also added RoboSense, which makes AI-powered robotic technology, saying the Shenzhen-based group is a military-civil fusion contributor to the Chinese defence industrial base. It also included BOE Technology, a maker of display panels for computers and smartphones. John Moolenaar, the chair of the House China committee, in 2024 urged the Pentagon to add BOE to the list.

    The defence department also removed two memory chipmakers — CXMT and YMTC — in an unexpected move. Michael Sobolik, a US-China expert at the Hudson Institute, said that given China’s commitment to military-civil fusion, it was unclear what would have changed to justify their removal.

    “The reputational windfall for these companies could increase their chances of selling memory chips to American customers,” he said. “The administration is trying to break the nation’s reliance on China for critical minerals. Why would we risk opening up more dependencies?”

    Alibaba is one of the highest-profile changes to the list. The NY Budgets reported in November that US intelligence believed it was providing technical support for Chinese military “operations” against targets in America.

    According to a White House security memo, Alibaba also allegedly provides the Chinese government and PLA with access to customer data. Alibaba strongly rejected the allegations in the memo.

    On Friday, Alibaba said there was “no basis” to conclude that it should be added to the list. “Alibaba is not a Chinese military company nor part of any military-civil fusion strategy. We will take all available legal action against attempts to misrepresent our company.”

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    Baidu said the Pentagon claim was “entirely baseless and no evidence has been produced that would prove otherwise”. It said it would “not hesitate to use all options available” to be removed from the list. BYD said any proposal to put it on the list was “completely unfounded”.

    “BYD is not a Chinese military company, nor has it participated in any military-civil fusion strategy.”

    The White House did not respond to a request for comment about why the Pentagon list was abruptly removed from the Federal Register.

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  • Trump Imposes 100% Tariff on China Over Rare-Earth Restrictions

    Trump Imposes 100% Tariff on China Over Rare-Earth Restrictions

    China Dominates the Rare Earths Market. This U.S. Mine Is Trying to Change That. © Bridget Bennett for Poltico

    President Donald Trump announced on Friday that the United States will slap an additional 100% tariff on all Chinese imports starting November 1, on top of existing duties, while imposing sweeping export controls on “any and all critical software.” The move, framed as retaliation for Beijing’s recent tightening of export restrictions on rare earth elements, sent shockwaves through global markets, wiping out nearly $2 trillion in stock value and reigniting fears of a full-blown decoupling between the world’s two largest economies. With bilateral trade already strained by springtime tariff spikes that peaked at 145% on U.S. goods into China, Trump’s latest salvo—potentially pushing effective rates above 130%—threatens to upend supply chains for everything from semiconductors to electric vehicles, at a time when the global rare earth market is forecasted to exceed $6 billion annually by decade’s end.

    Trump’s announcement, delivered via a series of fiery Truth Social posts and reiterated during an Oval Office press availability, accused China of a “sinister and hostile” strategy to hold the world “hostage” through its dominance in rare earths—a group of 17 metals vital for high-tech manufacturing, defense systems, and green energy technologies. “It is impossible to believe that China would have taken such an action, but they have, and the rest is History,” Trump wrote, vowing that the tariffs could arrive “sooner” if Beijing escalates further. He also hinted at broader U.S. countermeasures, including restrictions on airplane parts and other exports, noting China’s reliance on Boeing components. The president stopped short of confirming the cancellation of his planned meeting with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea later this month, but earlier posts declared “no reason” for the sit-down, citing the “extraordinarily aggressive” timing of China’s moves—just days after a U.S.-brokered Middle East ceasefire.

    Beijing’s Rare Earth Gambit: A Calculated Squeeze on Global Supply Chains

    China’s actions, unveiled by the Ministry of Commerce on October 9, mark a significant hardening of its position in the ongoing trade skirmishes. Under “Announcement Number 61 of 2025,” Beijing expanded export licensing requirements to cover products containing more than 0.1% of rare earth elements sourced from China, even if manufactured abroad, effectively barring unlicensed shipments to foreign defense and semiconductor firms starting December 1. The curbs now encompass 12 of the 17 rare earths, including newly added holmium, erbium, thulium, europium, and ytterbium, alongside technologies for extraction, refining, and magnet production. Additional restrictions on lithium-ion batteries, graphite cathodes, and artificial diamonds take effect November 8.

    These measures build on decades of state-backed dominance: China controls 61% of global rare earth mining and a staggering 92% of refining capacity, per the International Energy Agency, fueled by subsidies that have undercut competitors worldwide. Rare earths are indispensable for neodymium-iron-boron magnets in EV motors, fighter jet engines, and smartphone vibrators—sectors where U.S. firms like Tesla, Lockheed Martin, and Apple are heavily exposed. Analysts at the Center for Strategic and International Studies warn that the restrictions could disrupt U.S. defense supply chains, echoing 2010 when Beijing briefly cut off exports to Japan over territorial disputes. “This isn’t just trade policy; it’s economic warfare aimed at critical vulnerabilities,” said Dr. Elena Vasquez, a trade economist at the Peterson Institute for International Economics.

    The timing appears deliberate, coming amid fragile progress in U.S.-China talks. After tit-for-tat hikes earlier this year drove tariffs to extreme levels—145% on U.S. imports to China and 125% in reverse—the two sides agreed in May to slash rates to 30% and 10%, respectively, pausing 24% of levies until November 10. Positive negotiations in Switzerland and the U.K. had raised hopes for a broader deal, but Beijing’s rare earth letter—sent to trading partners worldwide—has derailed that momentum. Trump decried it as a “moral disgrace” and a long-planned “lie in wait,” while posts on X from industry insiders echoed the surprise: “China’s rare earth curbs hit like a gut punch—right when talks were thawing,” one analyst tweeted.

    Trump’s response was swift and unyielding. In his initial Truth Social broadside, he lambasted Beijing for “clogging global markets” and provoking “trade hostility” that has drawn ire from allies like the EU and Japan. The 100% tariff—layered atop the current 30% effective rate on $438.9 billion in annual Chinese imports—could add $439 billion in costs to U.S. businesses and consumers if fully implemented, according to Wells Fargo economists. Coupled with export controls on critical software—potentially targeting AI tools, cybersecurity suites, and enterprise systems from firms like Microsoft and Oracle—the measures aim to mirror China’s leverage in minerals with America’s edge in tech.

    During a White House meeting on drug pricing, Trump doubled down, telling reporters the curbs were “shocking” and “very, very bad,” affecting “all countries without exception.” He floated expanding restrictions to “a lot more” items, including aviation parts, given China’s fleet of over 1,000 Boeing aircraft. On the Xi summit, Trump hedged: “I don’t know if we’re going to have it… but I’m going to be there regardless.” Earlier, he had signaled outright cancellation, writing, “now there seems to be no reason to do so.” Beijing has yet to respond formally, but state media like Global Times called the tariffs “economic bullying,” while separately imposing port fees on U.S. ships in retaliation for American “discriminatory” docking charges.

    The broader U.S.-China economic ties add layers of complexity. Last year, China ranked as the third-largest U.S. trading partner, with a $295.4 billion deficit. Ongoing flashpoints include TikTok’s U.S. operations—requiring Beijing’s blessing for a ByteDance divestiture—and visa restrictions on Chinese students. Trump’s moves could jeopardize these, even as they bolster his domestic base ahead of midterms.

    Market Mayhem: Stocks Plunge, Safe Havens Surge Amid Trade Fears

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    Wall Street’s reaction was visceral. The S&P 500 .SPX -2.70% ▼ cratered 2.7% on Friday, shedding Dow Jones Industrial Average .DJI -2.25% ▼ 878 points, while the Nasdaq Composite .IXIC -3.60% ▼—its worst day since March—as tech giants like Nvidia NVDA -6.00% ▼ and Apple AAPL -4.00% ▼, reliant on Chinese rare earths for chips and devices, bore the brunt. The sell-off erased $1.9 trillion in market cap, with X users dubbing it “the day markets fell” amid a “perfect storm” of U.S. shutdown fears, tariff threats, and Fed signaling confusion. Crypto markets fared worse: Bitcoin BTC -7.50% ▼, Ethereum ETH -12.00% ▼, and liquidations hit $19 billion, per SoSoValue data, as leveraged longs unwound en masse.

    Safe havens rallied. Gold surged 2.1% to $2,650 per ounce, while U.S. rare earth miners like MP Materials jumped 8%, buoyed by prospects of domestic substitution. Globally, the Shanghai Composite dipped 1.9%, and the Hang Seng fell 2.4%, reflecting spillover risks. Semiconductor firms like ASML braced for fallout, with shares down 4.2%, as China’s curbs threaten the $500 billion chip industry’s raw materials.

    Economists warn of deeper scars. The global rare earth market, valued at $3.95 billion in 2024, is projected to hit $6.28 billion by 2030 at an 8% CAGR, driven by EV and renewable demand—but tariffs could inflate prices 20-30%, per Grand View Research. U.S. consumers might face $1,000 annual household cost hikes, akin to 2018’s trade war, while exporters like Boeing could lose $10 billion in orders. “This risks a vicious cycle: higher costs, slower growth, and fragmented innovation,” said JPMorgan’s Michael Feroli.

    Economic Stakes: From EVs to National Security

    The rare earth flashpoint underscores the trade war’s evolution from tariffs to strategic chokepoints. China’s monopoly—forged through subsidies and lax environmental rules—has long irked Washington, prompting the CHIPS Act’s $52 billion in domestic incentives. Yet, U.S. refining capacity remains nascent, covering just 15% of needs. Trump’s software controls, meanwhile, target China’s AI ambitions, potentially stalling Huawei and Baidu’s advancements.

    For Beijing, the curbs safeguard “national security,” but they invite blowback. Exports of rare earths generated $5.2 billion last year; restrictions could shave 2% off GDP growth if retaliation spirals, per Oxford Economics. Allies like Australia and Canada, ramping up mines, stand to gain, but short-term disruptions loom for Europe’s auto sector, where 40% of EV magnets are Chinese-sourced.

    X chatter reflects the angst: “Trump’s tariff nukes markets—China’s rare earth play was checkmate,” one trader posted, while another quipped, “Trade war 2.0: Now with extra monopoly drama.” Broader ripple effects include a 0.5% hit to U.S. GDP in 2026, per Federal Reserve models, and stalled WTO reforms.

    As November 1 looms, the onus falls on diplomacy—or its absence. Trump’s APEC attendance keeps the Xi channel ajar, but observers like Al Jazeera’s Ahmed Fouad doubt a breakthrough: “Beijing’s holding aces in minerals; Washington in tech—stalemate seems likely.” A Reuters analysis pegs escalation odds at 60%, potentially costing $500 billion in lost trade.

    For businesses, the message is clear: Diversify now. “Potentially painful” in the short term, Trump insists, but “very good… for the U.S.A.” in the end. Yet, as markets reel and supply chains fray, the world watches a high-stakes poker game where both players hold loaded dice—and rare earths are the wild card.

  • Beijing’s Cutbacks Shake America’s Soybean Trade

    Beijing’s Cutbacks Shake America’s Soybean Trade

    In the heart of the Midwest, where golden fields stretch toward the horizon under a crisp autumn sky, the hum of combines should signal prosperity. Instead, for America’s soybean farmers, harvest season has become a grim countdown to financial ruin. As they reap what the U.S. Department of Agriculture (USDA) projects to be a record 4.2 billion bushel crop this year, their largest buyer—China—has vanished from the market, leaving silos overflowing and prices plummeting to five-year lows around $9.50 per bushel.

    China hasn’t booked any U.S. soybean purchases in months; farmers warn of ‘bloodbath’

    The trade war between the United States and China, now in its second year under President Donald Trump’s renewed tariff regime, has turned soybeans into collateral damage. Beijing’s retaliatory 25% tariffs on U.S. agricultural imports have priced American beans out of the Chinese market, where they once commanded over half of the $24.5 billion in annual U.S. soybean exports. From January through August 2025, Chinese imports of U.S. soybeans totaled a mere 200 million bushels—down from nearly 1 billion bushels in the same period of 2024, according to USDA trade data. That’s a 80% plunge, robbing Midwestern farmers of billions in revenue and forcing a scramble for alternative markets that may never fully compensate.

    “We’ll see the bottom drop out if we don’t get a deal with China soon,” warns Ron Kindred, a veteran farmer managing 1,700 acres of corn and soybeans in central Illinois. Halfway through his harvest, Kindred has locked in contracts for just 40% of his crop at prices already eroding below $10 per bushel in local elevators. The remaining 60% sits in limbo, a high-stakes bet on a breakthrough in Washington-Beijing negotiations. “There’s no urgency on China’s side, and the farm community’s clock is ticking louder every day,” he adds.

    Kindred’s plight echoes across the soybean belt, from Illinois prairies to Iowa’s rolling hills. Rising input costs—fertilizer up 20-30% year-over-year, equipment maintenance strained by inflation, and a glut of both corn and soybeans flooding domestic markets—were squeezing margins even before the trade spat escalated. Now, with China’s boycott, the USDA estimates average losses of up to $64 per acre for Illinois growers alone, the nation’s top soybean-producing state with 6.2 million acres planted this year. University of Illinois Extension economists project total state-level shortfalls could exceed $400 million if export volumes don’t rebound by spring 2026.

    Enter the Trump administration’s lifeline: a proposed $10-14 billion farmer aid package, building on December 2024’s $10 billion relief bill. The Wall Street Journal reported last week that President Trump, speaking at the White House on October 6, vowed to “do some farm stuff this week” to cushion the blow. Aides say he’s slated to huddle with Agriculture Secretary Brooke Rollins as early as Friday to finalize funding sources, leaning heavily on the $215 billion in tariff revenues collected during fiscal 2025 (October 2024-September 2025), per U.S. Treasury figures. “The president is deploying every tool in the toolbox to keep our farmers farming,” a USDA spokesman told Reuters.

    Yet for many in the heartland, the aid feels like a temporary fix for a structural crisis. Soybean farmers, who backed Trump overwhelmingly in 2024 (with 62% of rural voters in key swing states like Iowa and Wisconsin casting ballots for him, per Edison Research exit polls), are voicing frustration laced with loyalty. “We voted for strong trade deals, not handouts,” says Scott Gaffner, a third-generation farmer in southern Illinois tending 600 acres. His crop, typically destined for Chinese ports, now languishes in on-farm silos as he frets over fixed costs like diesel fuel and seed that have surged 15% since planting. “We’re not just anxious; we’re angry. When the administration’s jetting off to Spain for TikTok talks while our harvest rots, it feels like we’re the last priority.”

    Gaffner’s son, Cody, the would-be fourth generation on the land, echoes the generational stakes. “If I return after college, it’ll be with a second job just to make ends meet,” the 22-year-old says. Their story underscores a broader ripple: Rural economies, where agriculture drives 20-25% of GDP in states like Illinois and Iowa, are buckling. Tractor sales at CNH Industrial, a Decatur, Illinois-based giant, plunged 20% in the first half of 2025, CEO Gerrit Marx revealed in an August interview at the Farm Progress Show. “The good news only flows when China places orders,” Marx said, a sentiment that hung heavy over the event in the self-proclaimed “soy capital of the world”—a title now whispered to be shifting south to Brazil.

    Dean Buchholz, a DeKalb County, Illinois, peer of Gaffner’s, is already waving the white flag. After decades in the fields, skyrocketing fertilizer bills and sub-$10 soybean futures have convinced him to retire. “I figured I’d farm till they buried me,” the 58-year-old says. “But with debt piling up and health acting up, it’s time to rent out the acres. This trade war’s the final straw.”

    Desperate Diplomacy: Chasing Markets in Unlikely Corners

    With China—home to the world’s largest hog herd and importer of 61% of global traded soybeans over the past five years, per the American Soybean Association—off the table, U.S. agribusiness is on a global charm offensive. Trade missions to Nigeria, memorandums with Vietnam, and a 50% surge in sales to Bangladesh (up to 400,000 metric tons through July 2025) highlight the scramble. Yet these “base hits,” as Iowa farmer Robb Ewoldt calls them, pale against China’s home-run demand.

    Ewoldt, who farms 2,000 acres near Des Moines, jetted to Rome in January to woo a Tunisian poultry giant. “They grilled me: Can we count on steady U.S. supply, or will you switch crops and jack up prices?” he recalls. Tunisia’s imports, while growing, total under 100,000 tons annually—barely a blip. “It helps long-term, but right now, we’re cash-strapped. My operation burns a million bucks a year; without sales, we’re dipping into reserves just to cover debt service.”

    Across the Mississippi, Morey Hill has logged thousands of miles this year, from Cambodia’s fish ponds to Morocco’s chicken coops. In Phnom Penh last week, the Iowa grower evangelized to importers about swapping low-protein “fish meal” for U.S. soybean meal, touting yields that could fatten local aquaculture 20-30%. “We’ve got success stories—Vietnam’s up 25% year-over-year to 1.2 million tons,” Hill says. But even aggregated, the EU and Mexico (combined $5 billion in sales) plus risers like Egypt, Thailand, and Malaysia can’t fill the void: Total U.S. soybean exports dipped 8% to 18.9 million metric tons through July, USDA Census Bureau data shows.

    Industry lobbies are pulling levers too. The U.S. Soybean Export Council sponsored a June Vietnam mission yielding $1.4 billion in MOUs for ag products, including soy. August brought Latin American buyers to Illinois for farm tours, though exports to Peru and Nicaragua remain negligible. In Nigeria, a modest 64,000 tons shipped last year hasn’t translated to 2025 bookings yet. And Secretary Rollins’ September tweet hailing Taiwan’s “$10 billion” four-year ag commitment? It’s a rebrand of existing $3.8 billion annual flows, not new money, USDA clarifications confirm.

    “There’s talk of India, Southeast Asia, North Africa as future markets,” says Ryan Frieders, a 49-year-old Waterman, Illinois, farmer who joined a February trek to Turkey and Saudi Arabia. “But nothing explodes overnight to replace China.” Frieders, facing $8-10 per acre losses per University of Illinois models, plans to bin most of his harvest, gambling on futures prices rebounding above $11 by Q1 2026.

    The Shadow of South America and Tariff Games

    As U.S. beans languish, Brazil and Argentina feast. China, pivoting since 2018’s first trade war, now sources 80% of its needs from South America. Last month, Argentine President Javier Milei’s temporary export tax suspension lured $500 million in Chinese cargoes, traders at the Chicago Mercantile Exchange report. U.S. beans traded at $0.80-$0.90 per bushel cheaper than Brazilian equivalents for September-October shipment, but Beijing’s 23% tariff tacks on $2 per bushel—enough to divert 5 million metric tons southward.

    “The frustration is overwhelming,” says Caleb Ragland, 39, Kentucky farmer and American Soybean Association president. On Truth Social Wednesday, Trump himself griped: “Our Soybean Farmers are hurting because China, for ‘negotiating’ reasons, isn’t buying.” He teased soybeans as a centerpiece in his upcoming summit with Xi Jinping in four weeks. Treasury Secretary Scott Bessent, speaking Thursday, promised a Tuesday announcement on aid, potentially including a $20 billion swap line for Milei—irking U.S. growers who see it as subsidizing their rivals.

    On Friday, soybean futures closed at $9.42 per bushel on the CME, down 2% weekly amid harvest pressure and zero Chinese bookings. Analysts at Zaner Ag Hedge forecast a “bloodbath” if no deal materializes by November: Storage costs could add $0.50 per bushel, while on-farm debt—$450 billion industry-wide, per Farm Credit Administration—balloons.

    The trade war’s winners? South American exporters, grinning from bumper crops (Brazil’s output hits 155 million metric tons this year, USDA estimates), and U.S. tariff coffers, flush for bailouts. Losers abound: From Decatur’s processing plants, once buzzing with Chinese-bound shipments, to the 1.2 million farm jobs at risk nationwide, per the American Farm Bureau Federation.

    For Kindred, Gaffner, and their ilk, the math is merciless. “We want trade, not aid,” Gaffner insists. “China’s building routes elsewhere; once they’re hooked on Brazil, we might never claw it back. That’s not just my farm—it’s the next generations, the rural towns, the whole engine of America’s breadbasket.”

    As combines roll on, the Midwest holds its breath. A Xi-Trump handshake could flood elevators with orders; stalemate risks a cascade of foreclosures and fallow fields. In this high-stakes harvest, soybeans aren’t just seeds—they’re the fragile thread binding U.S. farmers to their future.