Trump Versus Xi: A Blow-by-Blow Analysis of the US–China Trade War

Containers at the port in Nanjing, in eastern Jiangsu Province, China, on Aug. 12, 2025. AFP via Getty Images

Commentary

The world’s two largest economies are once again battling for dominance.

In the latest exchange between U.S. President Donald Trump and Chinese leader Xi Jinping, Beijing is using financial markets as leverage in the trade war, betting that a sustained downturn might pressure Trump to compromise.

The Trump administration, however, has made clear it will not adjust its policies based on stock fluctuations, insisting negotiations will proceed only on terms that serve America’s economic interests.

This trade war is part two, a rematch of the contest fought between the two leaders. What follows is a round-by-round look at how the renewed U.S.–China trade war is unfolding.

Round 1 (February–April)

Trump opened his second term with aggressive tariffs, imposing a 10 percent duty on all Chinese imports in February, citing trade deficits and fentanyl concerns. By early April, he escalated further, announcing sweeping reciprocal tariffs that sent rates on Chinese goods soaring to 145 percent, effectively an embargo.

Beijing countered with 125 percent tariffs on U.S. exports, targeting agricultural machinery, coal, and liquefied natural gas, while also launching an antitrust probe into Google, signaling its readiness to use regulatory power as a weapon.

Global markets plunged as recession fears grew and supply chains faltered. For months, investors and consumers held their breath, slowing the world economy. By midyear, talk of a truce surfaced, but neither side was ready to yield, leaving global commerce suspended in uncertainty as the trade war entered its next phase.

Round 2 (May)

After months of bruising exchanges, both sides met in Geneva, Switzerland. On May 12, the White House announced a “historic trade win”: tariffs would be cut by 115 percent, leaving a 10 percent baseline during a 90-day truce. The effective U.S. tariff on Chinese goods fell from 145 percent to 30 percent, while China’s rate on U.S. goods dropped from 125 percent to 10 percent.

The truce was extended twice, moving the deadline to Nov. 10. During this period, Trump struck new trade frameworks with other partners and added more Chinese companies to export control lists—42 in March and 23 in September. China’s exports to the United States fell 27 percent year-on-year in September, but overall exports dropped 8.3 percent as it diversified toward Europe and other markets.

In August, Trump approved Nvidia’s H20 chip sales to China in exchange for a 15 percent revenue cut. At around the same time, Washington expanded export restrictions, blacklisting thousands of Chinese companies.

Beijing retaliated in September by accusing Nvidia of antitrust violations, prompting Trump to tighten controls further by adding subsidiaries of already-sanctioned companies.

Round 3 (Late September)

On Sept. 19, Trump and Xi spoke by phone, and Trump said they agreed to meet at the APEC summit in South Korea in October. Beijing has yet to confirm whether Xi will attend.

Just days later, on Sept. 29, Washington again expanded its export control list, which substantially increased the number of Chinese entities affected.

Round 4 (Oct. 9)

Beijing retaliated by announcing sweeping export controls on rare earth elements, effective Dec. 1. The measures expanded licensing for 12 of the 17 rare earth metals and restricted the export of refining equipment and related technologies. Foreign companies would be required to obtain licenses for any product containing more than 0.1 percent Chinese rare earth content, with all military-related exports outright banned.

China controls roughly 70 percent of global rare earth mining and an estimated 93 percent of magnet production, materials essential for electronics, semiconductors, electric vehicles, jet engines, and advanced defense systems. The move signaled that Beijing was prepared to weaponize its resource dominance.

Round 5 (Oct. 10)

Trump hit back within hours on Truth Social, announcing an additional 100 percent tariff on Chinese goods, effective Nov. 1, “over and above any Tariff that they are currently paying.” He also threatened export controls on “any and all critical software.”

In the same post, he called the Chinese measures an “extraordinarily aggressive position on Trade” and “a moral disgrace in dealing with other Nations.”

Markets plunged. The Dow fell 878 points (1.9 percent), the S&P 500 dropped 2.7 percent, and the Nasdaq tumbled 3.5 percent.

The move made clear the gloves were off, turning the trade war into a full-scale economic brawl.

Round 6 (Oct. 10)

Both nations quickly opened a new front at sea. China imposed “special port fees” on U.S.-built or operated ships, effective Oct. 14.

The United States had introduced similar fees in April to discourage Chinese vessel purchases and curb Beijing’s influence over global shipping routes.

Round 7 (Oct. 12–13)

Verbal Sparring. As tensions escalated, Beijing defended its rare earth export controls as “legitimate” under international law, accusing Washington of having double standards and “abusing” export controls. A statement from China’s Commerce Ministry declared, “China’s position on the trade war is consistent: we do not want it, but we are not afraid of it.”

U.S. Treasury Secretary Scott Bessent fired back, calling China’s actions provocative and warning, “They have pointed a bazooka at the supply chains and the industrial base of the entire free world.”

The exchange underscored how quickly the trade war had shifted from economic maneuvering to open confrontation, each side wielding words as forcefully as tariffs and sanctions.

Round 8

Bessent confirmed that U.S.–China trade talks were still alive.

Trump struck a conciliatory tone on Truth Social: “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment … The U.S.A. wants to help China, not hurt it!!!”

Markets rebounded on hopes that the worst was over.

The calm didn’t last. On Oct. 14, Trump reignited tensions, threatening to halt all cooking oil trade with China over its refusal to buy American soybeans. In a Truth Social post, he called the move “an Economically Hostile Act.” The statement revived fears of renewed escalation and showed how volatile the standoff remained.

Trump and Xi are expected to meet at the APEC summit this week, and both have a habit of escalating tensions before negotiations, only to pull back at the last minute. The question now is whether they’ll do so again. It’s no longer a boxing match but a game of chicken, and whoever blinks first loses.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.