KUALA LUMPUR, 16 October 2025 — Global markets are bracing for fresh volatility as renewed US–China trade tensions send oil prices tumbling and rattle investor confidence.
The escalation follows President Donald Trump’s announcement of a 100% tariff on all Chinese imports, while Beijing retaliated by tightening controls on rare-earth exports, a move that underscores its leverage in the global supply chain ahead of the 90-day truce deadline.
According to energy consultancy Rystad Energy, the intensifying tariff measures could accelerate a strategic decoupling between the world’s two largest economies, with long-term consequences for energy markets and global manufacturing.
Claudio Galimberti, Chief Economist and Global Market Analysis Director at Rystad Energy, warned that the deeper concern lies not in rhetoric, but in the “underlying strategic breakup” between Washington and Beijing.
“China’s decision to leverage rare-earth exports, an area where it still controls around 70 to 80% of global refining capacity, highlights the current strategic vulnerability of US supply chains,” said Galimberti. “Even during years of escalating trade tensions, both sides showed restraint in this sector, that restraint is now over.”
China’s newly expanded minerals control list directly targets high-end magnet and chip-grade materials critical for defense systems and electric vehicle manufacturing, potentially disrupting supply chains if negotiations fail after November. “The stakes cannot be any higher,” Galimberti added.
The United States remains heavily reliant on China for rare-earth imports, which account for roughly 80% of the total US supply, with Malaysia and Estonia filling most of the remainder. Despite having some domestic mining output at California’s Mountain Pass operation, the US lacks refining capacity to process these strategic minerals.
Market Impact
The renewed tariff tensions immediately reverberated through global markets. US equities plunged at the end of last week before only marginally recovering, while Asian currencies weakened amid heightened risk aversion.
Gold surged to a record US$4,200 per ounce, up more than 50% year-to-date, as investors sought a haven against mounting political and fiscal risks.
Meanwhile, oil prices slid sharply on concerns that slowing trade could dampen global energy demand, adding further strain to markets already navigating economic uncertainty and geopolitical frictions.
As both nations harden their positions, analysts caution that the next 90 days could prove pivotal, potentially shaping the trajectory of global trade, energy stability, and supply chain resilience for years to come.
