US stock markets plunged on Friday as fears of a renewed trade war intensified after President Donald Trump accused China of adopting an “extremely hostile” trade posture, sparking widespread speculation about fresh US trade measures.
During trading hours, Trump took to Truth Social to allege that Beijing had sent letters to several countries announcing new export controls on rare earth elements and other key materials. He warned that China’s move could “clog global markets” and disrupt supply chains across industries, calling it a “sinister and monopolistic” strategy.
Trump said the United States and its partners were caught off guard despite “good relations” with China over the past six months. He also said he had cancelled a planned meeting with Chinese President Xi Jinping at the upcoming APEC summit in South Korea.
The president hinted that Washington was preparing “strong countermeasures,” including a “massive increase in tariffs” on Chinese goods, but stopped short of makinga formal announcement during market hours.
$1.5 trillion wiped out from US markets
By the end of the session, Wall Street had logged its sharpest losses in months. The Nasdaq fell 3.56 per cent, the Dow Jones Industrial Average dropped 878.82 points, and the S&P 500 slipped 2.71 per cent. The Dow closed at 45,479.60, the S&P 500 at 6,552.51, and the Nasdaq at 22,204.43.
More than $1.5 trillion in market value was erased from US equities, while the cryptocurrency market saw record liquidations of nearly $19 billion –the biggest single-day total on record. The sharp sell-off reflected investor unease over escalating tensions between Washington and Beijing and the risk of a fresh global trade shock.
Trump announces 100% tariffs, export controls after market hours
After markets closed, Trump released another statement on Truth Social formally announcing a 100 per cent tariff on Chinese goods and export controls on critical software, effective November 1, 2025.
“Based on the fact that China has taken this unprecedented position… starting November 1, 2025 (or sooner, depending on any further actions or changes taken by China), the United States of America will impose a Tariff of 100 per cent on China, over and above any Tariff that they are currently paying. Also on November 1, we will impose Export Controls on any and all critical software,” Trump stated.
The announcement came after Trump accused China of taking an “extraordinarily aggressive position on trade” by sending what he described as “an extremely hostile letter to the world.”
China, which dominates global processing of rare earths used in smartphones, electric vehicles, and defence equipment, expanded its export restrictions earlier this week to include five additional minerals–holmium, erbium, thulium, europium, and ytterbium–bringing the total to 12 out of 17 rare earth types now under control.
Export licences will be mandatory not just for these materials but also for technologies related to mining, smelting, and magnet production, raising fears of fresh disruptions in global supply chains and high-tech manufacturing.