Donald Trump has intensified trade tensions with China by threatening a 200% tariff on Chinese magnets. This threat comes in the wake of China's April decision to restrict exports of rare earth magnets, which are critical for manufacturing products like smartphones, electric vehicles, and defense systems. China currently controls 90% of the global magnet supply, which puts the U.S. and its allies in a difficult position as they seek to secure these components.
This escalation is part of a broader series of trade actions. Following an increase in U.S. tariffs earlier this year, China added several magnet-related materials to its export control list. The situation has been exacerbated by the U.S. taking a 10% stake in Intel, a major chipmaker that relies on China for rare earth materials.
Recent trade data shows that Chinese rare earth exports surged by over 4,700 tonnes in July, a move that gives Beijing more leverage in negotiations.
Trump's administration has also extended a 90-day delay on new tariff hikes against Chinese imports. Without this order, tariffs on Chinese goods would have risen to 145%. Earlier in the year, a temporary truce had lowered U.S. tariffs from 145% to 30%, and Chinese tariffs from 125% to 10%. This truce is set to expire on November 9.
From January to April 2025, the average U.S. tariff rate climbed from 2.5% to 27%, the highest level in over a century. By August 2025, it was adjusted to 18.6% after policy changes. Despite this reduction, the rate remains significantly above historical norms. As of July, tariffs accounted for 5% of total U.S. federal revenue, which is more than double the usual share.
In addition to the actions against China, Trump has used Section 232 of the 1962 Trade Expansion Act to increase tariffs on steel, aluminum, and copper to 50%. He also imposed a 25% duty on imported cars from most countries. On April 2, he invoked the International Emergency Economic Powers Act (IEEPA) to authorize a universal 10% tariff on all imports from countries without separate trade deals, which took effect on April 5.
While country-specific tariffs were temporarily paused after the 2025 stock market crash, they were reactivated on August 7, fueling tensions with Canada and Mexico and further escalating the dispute with China. The temporary agreement to ease duties between the U.S. and China is now nearing collapse, with baseline tariffs at a peak of 145% for Chinese imports and 125% for U.S. goods.
Another significant change is an executive order signed by Trump, set to take effect on August 29, 2025, which eliminates the "de minimis" exemption. This exemption previously allowed shipments valued under $800 to bypass tariffs. Its elimination means that small packages, particularly from Chinese e-commerce platforms, will now be subject to full tariffs.
