US Set to Impose 100% Tariff on All Chinese Imports in Major Escalation

In a significant escalation of trade tensions, US President Donald Trump announced on 10 October, 2025, that a new additional tariff of 100% will be imposed on all goods imported from China, effective from 1 November.

Simultaneously, the administration revealed stringent new controls on the export of 'all critical US-made software' to China. The new tariff measure will be superimposed on existing import duties, a move the administration stated would raise the total tariff rate on Chinese goods to '130% or higher'.

Comprehensive Tariff Measures

The policy applies universally to all Chinese imports. The stated scope includes consumer electronics, machinery and equipment, textiles, toys, and agricultural products, covering nearly the entirety of the US-China trade relationship, which recorded a total volume of approximately $500 billion in 2024.

President Trump indicated that the 1 November effective date could be brought forward to 'late October' if China were to further escalate its own measures, specifically citing a potential 'complete embargo' on rare earth exports.

The new 100% tariff will be stacked atop existing base tariffs, including a 10% retaliatory tariff and a 20% tariff related to fentanyl precursors, resulting in the cited total rate exceeding 130%.

While no exemptions were mentioned in the announcement, the US Department of Commerce is anticipated to grant temporary exclusions for certain 'strategically essential goods'. The process for businesses to apply for relief is expected to be stringent.

Expanded Software Export Controls

In a parallel technological move, the US will implement strict controls on 'any and key software' exports to China.

The controlled items specifically include US-developed operating systems, AI algorithms, cloud computing tools, semiconductor design software from firms such as Cadence and Synopsys, and enterprise-level software including Oracle databases and Microsoft Azure services.

The control mechanism will be an export licensing system, effectively prohibiting unauthorised software exports to Chinese entities, particularly those on the US Entity List. Restrictions will also extend to software updates and service support, with potential for retroactive application to already-installed US software.

The Bureau of Industry and Security (BIS) will enact these controls effective 1 November by amending the Export Administration Regulations (EAR), a process that could lead to China's designation as a 'high-risk destination'.

Recent Chinese Rare Earth Measures

On 9 October, China's Ministry of Commerce issued notices strengthening export controls on rare earth-related items and technologies.

The regulations impose controls on certain overseas rare earth items containing Chinese components and on related technologies. This requires foreign companies to obtain Chinese approval to export magnets containing Chinese rare earth elements or produced using Chinese technologies.

China holds a dominant position in the global rare earth sector, controlling approximately 70% of mining, 90% of separation and processing, and 93% of magnet manufacturing.

The Chinese rules have a broad reach, with some items subject to controls from 1st December, and others effective immediately. Furthermore, China stated it 'will not grant export licences in principle' for most military applications, while AI development with potential military uses will be 'reviewed on a case-by-case basis'.

US media and analysts have noted the vulnerability of semiconductor and AI supply chains. Joseph Hofer, Chief AI Officer at lobbying firm Monument Advocacy, commented: 'This is a genuine pain point for American AI companies,' highlighting challenges in bolstering domestic production.

Economic Analysis and Global Impact

Economic analysts suggest that from a certain threshold, further tariff hikes become counterproductive. There is a consensus within industry that once tariff rates climb into the 50% to 70% range, further increases lose practical economic significance. Excessively high duties typically result in costs being passed to domestic consumers, fuelling inflation, or forcing complex and costly realignments of global supply chains.

From an economic and trade perspective, Trump's aggressive tariff policy is inherently contradictory. America's unilateral trade protection measures not only violate World Trade Organisation rules but also render global supply chains 'more circuitous, complex and fragile'.

With the proposed implementation date of 1st November still ahead, significant uncertainty remains over the final form of these announced US policies and the subsequent response from international partners.