US-China Chip and Semiconductor Tensions Escalate Amid Tariff Threats

Industry Insights from Next Move Strategy Consulting

China’s Ministry of Commerce has condemned US President Donald Trump’s latest warning to impose a 100% tariff on Chinese goods, calling it “a typical example of US double standards.” The statement marks a new flashpoint in the long-standing trade and semiconductor rivalry between the two largest economies.

Beijing Pushes Back Against Tariff Threats

In response to Trump’s remarks, China indicated it may introduce “countermeasures” if the threatened tariffs take effect, adding that it is “not afraid” of a potential trade war. The ministry emphasized that “resorting to tariff threats is not the right way to engage with China”, asserting that the country’s stance has remained consistent it does not seek a tariff war, but it will not shy away from one.

The renewed tensions follow Washington’s criticism of Beijing’s decision to tighten export controls on rare earths, vital materials used in advanced technologies including chips, solar panels, and smartphones. China currently processes about 90% of the world’s rare earths, and the move is seen as an effort to safeguard its strategic interests in the global tech supply chain.

US Export Restrictions and China’s Response

The Chinese commerce ministry accused the US of “overstretching the concept of national security” and “abusing export control measures”, referring specifically to restrictions on chips and semiconductors. It defended its own export policies as “normal actions” intended to protect national and global security interests.

Trump’s threats coupled with his suggestion that he might withdraw from a planned meeting with President Xi Jinping have rattled global markets. The S&P 500 fell 2.7%, its sharpest drop since April, while China’s Shenzhen Component Index dropped more than 2.5% and Hong Kong’s Hang Seng Index fell around 3.5%.

Market Jitters and Trade Outlook

The escalating rhetoric has reignited fears of a renewed US-China trade war, months after both nations agreed to drop triple-digit tariffs that had previously strained cross-border commerce. Currently, US goods entering China face a 10% tariff, while Chinese goods face an additional 30% levy compared to the start of the year.

The uncertainty has fueled speculation about whether the scheduled meeting between Trump and Xi, expected later this month in South Korea, will proceed as planned. Analysts see both sides’ recent comments as strategic positioning ahead of future negotiations.

Next Move Strategy Consulting’s Analysis

The latest developments underscore how semiconductor and rare earth supply chains remain central to global trade stability. According to Next Move Strategy Consulting, ongoing restrictions and countermeasures between the US and China are likely to reshape sourcing strategies, accelerate regional diversification, and heighten investment in semiconductor self-sufficiency. The consulting firm notes that these geopolitical frictions could significantly influence the future cost structure and innovation pace across the global chip market.

Source: BBC 

Prepared By: Next Move Strategy Consulting