A new wave of the US-China trade war is crashing markets
Last Thursday, China made a move that the US Administration viewed as an act of aggressive escalation of relations, so on Friday, President Trump threatened to impose prohibitive 100% tariffs on all Chinese imports, which led to a sharp collapse in oil prices and stock and commodity markets, as well as cryptocurrencies.
China’s Ministry of Commerce issued a shocking “Announcement No. 61” on October 9, 2025, requiring all foreign companies to obtain permission from the Chinese government to export goods containing 0.1% or more of the value of Chinese rare earths. With this decision, China is turning its 70% of the world’s rare earth production and 85% of its rare earth refining capacity into a tool of geoeconomic control.
The idea is simple: if you want to sell drones, missiles, smartphones, electric cars, or turbines, where (most likely) there are Chinese magnets, first ask permission from Beijing.
Moreover, it has already been stated that applications related to military or dual purpose will be considered particularly strictly and, as a rule, will be rejected.
President Trump has threatened a "massive increase" in tariffs on Chinese goods and said he no longer sees a reason to meet with Chinese President Xi Jinping at the APEC summit in South Korea this month.
The stock market responded with a drop in indices: the S&P 500 index closed down 2.71% on Friday, the Dow Jones Industrials index fell 1.90%, and the Nasdaq 100 index fell 3.49%.
Foreign stock markets also closed with a decline on Friday, although not as large: the Euro Stoxx 50 fell by 1.68%, the Chinese Shanghai Composite by 0.94%, and the Japanese Nikkei Stock 225 by 1.01%.
The US government shutdown has entered its second week, delaying key government economic reports and weighing on US market sentiment, with US indices falling more than others. The White House has warned that if the government shutdown drags on, it will lead to mass layoffs of workers in government programs that do not align with President Trump's priorities.
Bloomberg Economics predicts that 640,000 federal workers will be furloughed during the shutdown, leading to a surge in unemployment claims and a rise in the unemployment rate to 4.7%.
December Brent crude futures fell 4.1% to a 5-month low of $62.7/barrel on Friday, putting pressure on agricultural commodities used to make biofuels.
But the biggest collapse occurred in the cryptocurrency market, where a 10-20% drop in quotes on crypto exchanges led to a massive liquidation of trading positions that were betting on growth, and 1.66 million traders lost their money in the amount of $19.3 billion. The total capitalization of cryptocurrencies on Friday decreased by 10.91% (more than $300 billion) to $3.69 trillion.
Yes, Bitcoin fell to $100,000, but overall it fell by 11% to $110,000 per day, Ethereum fell by 14% to $3,759, BNB - by 13% to $1,096, Solana - by 16.02%, Cardano - by 20.9%, Avalanche - by 24.41%, XRP - by 15.65%, Dogecoin - by 22.28%, Chainlink - by 21.06%.
It should be noted that the cryptocurrency market has shown how volatile everything is in the market, and how large players easily drove the rate down and quickly bought up cheaper coins from small players, after which cryptocurrency rates rose again.
On Sunday, President Trump wrote a conciliatory message on social media: “Don’t worry about China, everything will be fine! The highly respected President Xi is just going through a difficult time. He doesn’t want depression for his country, and neither do I. The US wants to help China, not hurt it!!!”
The market is once again receiving confirmation of the TACO (Trump Always Chickens Out) strategy, which consists of buying assets during market declines caused by Trump's threats to impose tough sanctions, in the hope that prices will recover after Trump softens his stance under market pressure.
