US President Donald Trump on Friday (October 10) announced 100 percent tariffs on China “over and above any Tariff that they are currently paying,” effective November 1. He also announced export curbs on “any and all critical software.”Trump said he would also cancel his meeting with Chinese President Xi Jinping at the upcoming Asia-Pacific Economic Cooperation summit in South Korea.The move follows the sweeping export controls on rare earths and associated technologies announced by China earlier this week. Here is everything to know.First, what are rare earths?Rare earth metals, or rare earth elements (REEs), are a group of 17 chemical elements on the periodic table that share similar chemical properties and are silver-coloured in appearance.While REEs are not as rare as their name indicates, it is unusual to find concentrated and economically mineable deposits of REEs, despite their relative abundance compared to silver, gold or platinum. And crucially, China holds unparalleled expertise in refining REEs compared to other nations.REEs are extensively used in mobile phones, electric vehicles and other consumer electronics, as well as in bombs and other weapons, making them virtually indispensable globally.And, what restrictions has China announced now?On Thursday (October 9), China announced restrictions on the export of such magnets, which contain even trace amounts of Chinese-sourced rare earth materials, or those that relied on China’s extraction methods, refining or magnet-making technology. The licenses thus issued will cover foreign-made rare earth magnets and certain semiconductor materials that contain at least 0.1 per cent Chinese-origin heavy rare earths by value.Story continues below this adAccording to China’s commerce ministry, the restrictions would be phased in from December 1, the ministry said, and export licenses for most military users would be denied. Export applications for manufacturers of semiconductors and related equipment would be examined on a case-by-case basis, it added.This has been interpreted as a Chinese version of the US foreign direct product rule, in which the US moves to restrict the sale of such foreign items which are either the direct product of American-origin technology or software, or utilise a “major component” of a plant that is itself a direct product of the US. technology. In the past, the US has extensively used this rule to block exports of semiconductors and associated products to China from other countries.The Chinese government justified the measures, saying these are intended to “protect its national security and interests” and prevent the “misuse of rare earth materials in military and other sensitive sectors”. It had demanded a similar undertaking in May, with Indian automakers required to submit an undertaking to their Chinese suppliers that the rare earth magnets thus procured from would only be used in vehicles and not for defence or military applications.According to its commerce ministry, some overseas companies had significantly harmed China’s security by transferring Chinese-origin rare earth materials and technology to others for military use.Story continues below this adBut why are Chinese curbs on rare earth exports significant?Since the 1990s, China has held indisputable dominance over rare earths, supplying 85-95% of global demand. An analysis by The Financial Times revealed that China controls about 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing.The Chinese government declared rare earths as a “protected and strategic mineral” in the 1990s. This is an extraordinary leverage it has since weaponised in response to changing global demand and to resolve trade disputes. In the past, it has restricted these exports to Japan in 2010 over a fishing trawler dispute, and more recently to the US between 2023 and 2025.On April 4 this year, China announced a series of rare earth restrictions following Trump’s “Liberation Day” tariff announcements. The move then targeted finished items, specifically magnets, which are manufactured by only a few companies currently.The move, coupled with Trump’s tariffs, crippled supply chains worldwide almost immediately. REE exports halved in April, as companies struggled with the vague and tedious process of securing permits. American automakers were hit hard and forced to halt operations until the US could negotiate an agreement with China to resume their exports. In India too, automakers expressed fears of a prolonged shutdown of operations if the Indian government did not intervene, The Indian Express reported in May.Story continues below this adWill Trump’s countermeasures spur another trade war with China?To recall, Trump had repeatedly singled out China days after returning to the White House in January – first by imposing a 10% (now 20%) fentanyl tariff, and later by imposing an additional eye watering 145% tariff on all Chinese imports into the US in April. China did not blink, announcing 125% in countermeasures, restricting rare earths exports through an elaborate licensing system, citing a national security risk, and taxing US exports of coal and Liquefied Natural Gas (LNG).Since May, a restive truce has prevailed, with both countries dropping their triple-digit tariffs on each other. However, mutual tariffs are higher now than they were 10 months ago, with Chinese goods facing an additional 30% levy, and US imports into China face a new 10% tariff.Both sides have since held trade talks on matters ranging from agricultural purchases to the sale of TikTok to a US-owned business, as well as rare earths and semiconductors.While no specifics have been made on the “critical software” described in Trump’s latest ban, the move will likely restrict the sale of semiconductor chips. China had negotiated looser controls on semiconductors as part of its truce in July in exchange for easier access for the US to rare earths.