Chinese President Xi Jinping has drawn a decisive red line against new US export controls, threatening to unravel the fragile trade truce established in May 2025. As Trump administration officials signal intentions to impose tariffs exceeding 100 percent on Chinese goods and implement sweeping software restrictions, Beijing has responded with its own export controls on rare earth products—striking at the heart of US defense and technology capabilities. This escalating tit-for-tat cycle comes perilously close to a planned summit between the two leaders in South Korea, risking a return to the trade warfare that characterized Trump’s first term. For Singapore, a trading hub deeply integrated into global supply chains, the implications are profound and multifaceted.
Part I: The Escalation and the Breakdown of Understanding
The May Truce and Its Fragility
In May 2025, after months of escalating tensions that saw US tariffs climb above 100 percent on Chinese goods, both superpowers agreed to what appeared to be a ceasefire. However, this agreement masked a fundamental disagreement about what each side was committing to. For Xi Jinping, the truce represented a comprehensive freeze—a mutual understanding that neither side would impose new restrictions on critical shipments or levy fresh curbs on technology and rare earth supplies essential to national security. The Chinese leadership viewed this as a symmetrical agreement between equals, where restraint would be reciprocated.
The Trump administration, however, interpreted the May agreement more narrowly. From Washington’s perspective, the deal centered on tariff reduction in exchange for unobstructed flows of rare earth magnets—materials critical to American defense systems, renewable energy infrastructure, and advanced manufacturing. The US saw itself as having negotiated reduced import duties, not surrendering its strategic right to impose targeted export controls or technology curbs.
This divergence in interpretation set the stage for the current crisis. When Trump administration officials began drafting plans for new export controls on “any and all critical software” and signaled a doubling of tariffs to 100 percent—potentially reaching 140 percent in effective rates when combined with existing levies—Beijing viewed this as a unilateral breach of the May agreement. China’s response was swift and calculated: the introduction of wide-ranging global export controls on products containing even traces of certain rare earths.
China’s Rare Earth Counter-Move
Beijing’s strategy reveals sophisticated strategic thinking. Rather than matching the US move with immediate tariff retaliation or broad counter-sanctions, China targeted a resource where it maintains near-monopolistic control. Rare earth elements—particularly those essential for advanced semiconductors, military technology, and artificial intelligence applications—remain concentrated in Chinese production and processing facilities. According to industry analysis, China controls approximately 90 percent of rare earth processing capacity globally, giving it extraordinary leverage.
The timing of China’s export controls was deliberately chosen to maximize impact while maintaining plausible deniability about their protectionist nature. By applying restrictions that affect “any and all” products containing traces of certain rare earths, rather than explicitly targeting US companies, Beijing could argue it was implementing environmental or national security measures rather than engaging in economic warfare. This approach also affects European and Asian firms, complicating international pressure on China and potentially fracturing Western unity on trade policy.
Trump’s Escalatory Response
Trump’s immediate response demonstrated his characteristic willingness to engage in economic brinkmanship. Threatening to cancel the planned summit with Xi—their first meeting in six years—represented more than diplomatic posturing; it signaled that Trump viewed Chinese actions as an unacceptable challenge to American authority. By publicly announcing intentions to double tariffs and impose software curbs, Trump leveraged media attention and domestic political considerations, making retreat more difficult for his administration without appearing weak to his political base.
Bloomberg Economics chief Asia economist Chang Shu provided a sobering assessment of the proposed tariffs’ impact. A 100 percent increase would push effective tariff rates to approximately 140 percent—a threshold that essentially shuts down trade rather than merely raising costs. At such levels, the economics of importing Chinese goods into the US become mathematically nonsensical, forcing a fundamental restructuring of supply chains. While the current 40 percent rate (already 25 percentage points above the world average) is punishing for Chinese exporters, their manufacturing edge and automation capabilities have allowed them to maintain competitive exports. Tariffs exceeding 100 percent would sever most trade flows entirely.
Part II: Strategic Considerations and Historical Parallels
The Rare Earth Leverage
The asymmetry in rare earth production capacity represents one of the clearest strategic advantages either superpower holds in trade negotiations. In April 2024, when Trump first imposed 145 percent tariffs on Chinese goods, Xi responded by effectively blocking US firms from purchasing Chinese rare earth magnets. This action triggered factory closures across the American defense and technology sectors and sparked widespread panic about the nation’s dependence on Beijing for metals vital to national security.
The analysis provided by Hutong Research, an independent firm specializing in US-China relations, articulates a crucial strategic point: “Washington’s fear of China is strategic, not economic. A disruption in rare earth flows threatens defense production capacity, a core pillar of US global power projection and, by extension, dollar stability.” This observation captures why rare earth leverage holds disproportionate significance compared to its actual economic value. The materials in question represent a tiny fraction of overall trade, yet their strategic importance to military systems, satellite technology, and emerging AI applications makes them invaluable to national security considerations.
Differences from Previous Trade Wars
The current crisis differs markedly from the 2018-2020 trade war that characterized Trump’s first term. At that time, the dispute was largely about addressing perceived trade imbalances and protecting American manufacturing. Today’s conflict encompasses fundamental questions about technological dominance, artificial intelligence development, and military superiority in an increasingly multipolar world.
Former Global Times editor Hu Xijin, a commentator closely aligned with Chinese government perspectives, framed the current rupture as “a turning point” in the US-China relationship. His statement that “China will use its strength to prevent the US from crossing the line” suggests Beijing views rare earth controls not as negotiating tactics but as a redline defense against what it perceives as American technological encroachment. The emotional register of official Chinese responses—using phrases like “willful threats” and “coercive and unilateral actions of power politics”—indicates deeper frustration than mere trade disagreements.
Part III: The November Deadlines and Negotiation Window
A Compressed Timeline
Both sides have strategically positioned their most significant moves around November 2025, creating what appears to be a carefully choreographed timetable. Trump’s tariff increases are scheduled for November 1, deliberately timed to occur just days after the planned meeting with Xi at a South Korea summit. China’s new export controls are set to begin taking effect a week later, shortly before the latest trade truce—which has been holding back tariffs as high as 145 percent—expires.
This timeline structure suggests both leaders have left room for negotiation, but it also creates intense pressure. A successful summit could potentially defuse tensions before tariffs increase. Conversely, if talks break down, the tariff increase becomes nearly irreversible without significant face-saving measures on both sides.
Market Volatility and Economic Signals
The market reaction on October 10 underscored the economic fragility underlying these negotiations. US stocks suffered their worst sell-off in six months, while commodities across the board—soybeans, wheat, copper, and cotton—all declined sharply. This synchronized decline across multiple asset classes indicated genuine investor concern that trade relations could spiral beyond control.
However, the October 13 market recovery, following Trump administration signals of openness to a deal with China, demonstrated that markets interpret negotiating flexibility as risk-reducing. The Trump administration’s October 12 statement warning that Beijing’s export controls were “a major barrier to talks” but simultaneously signaling openness suggested the administration recognized the mutual damage of uncontrolled escalation.
Trump’s own statement on Truth Social, where he wrote “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment,” employed his characteristic negotiating style—combining confrontational rhetoric with reassurance designed to prevent panic while maintaining bargaining leverage.
Part IV: Singapore’s Multifaceted Exposure
The Strategic Position of Singapore
Singapore occupies a uniquely precarious position in the US-China trade conflict. As a tiny island nation with no significant natural resources and a population of just 5.7 million, Singapore’s prosperity depends entirely on its role as a global trading hub, financial center, and crucial node in international supply chains. Any disruption to global trade—particularly trade between the world’s two largest economies—directly impacts Singapore’s economic viability.
Unlike larger Southeast Asian nations that can rely on domestic consumption or regional trade to sustain growth, Singapore functions as a “entrepôt”—a trading intermediary and transshipment hub where goods are imported, repackaged, and re-exported to other markets. Approximately 15 percent of Singapore’s GDP derives from international trade, and the country handles roughly $1.3 trillion in annual trade flows. This exposure means that when global trade contracts, Singapore’s economy contracts disproportionately.
Supply Chain Vulnerability
Singapore’s role in semiconductor and technology supply chains places it directly in the crosshairs of US export controls and Chinese counter-measures. The island hosts major regional operations for companies like GlobalFoundries, which manufactures semiconductors crucial to everything from consumer electronics to military systems. Singapore also serves as a critical logistics hub for rare earth processing and distribution, with several Chinese companies maintaining regional operations on the island.
If US export controls on “any and all critical software” become effective, Singapore-based technology companies and semiconductor firms would face immediate compliance challenges. Similarly, Chinese export controls on rare earth products would disrupt the operations of logistics companies, traders, and manufacturers based in Singapore that depend on these materials.
The Monetary Authority of Singapore (MAS) has already signaled concern about trade-related risks. In its October monetary policy update, the central bank noted it would “weigh subdued inflation and the continuing threat of US trade measures against a resilient domestic growth outlook.” This language reflects the dilemma facing Singapore’s policymakers: trade tensions create deflationary pressures through lower global demand, yet the island’s economy remains resilient on the strength of its financial services sector and regional hub functions.
Financial Services and Investor Confidence
Beyond physical supply chains, Singapore’s financial services sector faces significant headwinds. As a major financial hub competing with Hong Kong for Asian wealth management and investment banking business, Singapore attracts global capital partly through its reputation as a stable, neutral ground for business. Escalating US-China tensions undermine this positioning.
The volatility in global markets cascades through Singapore’s financial system. The October 10 market sell-off that saw major stock indices decline sharply also affected Singapore’s stock exchange and the portfolios of local investors. More concerning for long-term economic health, extended trade tensions typically lead to reduced foreign direct investment as multinational corporations delay expansion plans and reassess regional strategies.
Currency and Monetary Policy Implications
Singapore’s currency, the Singapore dollar, serves as an important regional benchmark. During periods of global uncertainty, the currency typically strengthens as investors seek a “safe haven” similar to the Swiss franc or Japanese yen. However, this strength creates challenges for Singapore’s export-oriented economy, making local goods more expensive for foreign buyers and reducing profit margins for export-dependent companies.
The MAS manages monetary policy by targeting the Singapore dollar exchange rate against a basket of currencies, rather than traditional interest rate instruments. Trade tensions and capital flows create complications for this approach, particularly when they generate contradictory pressures—lower interest rates needed to support growth conflicting with exchange rate stability requirements.
Specific Sectoral Impacts
Petrochemicals and Refining: Singapore hosts one of the world’s largest petrochemical complexes. If trade tensions reduce global demand for refined products and chemicals, Singapore’s refineries would face reduced operating rates and lower margins.
Oil and Gas: Singapore serves as a major regional hub for offshore drilling operations, supply chain management, and LNG trading. Trade tensions affecting capital investment and commodity prices would directly impact this sector.
Electronics and Semiconductors: Beyond GlobalFoundries, Singapore hosts operations for numerous semiconductor companies and electronics manufacturers. Both US export controls and Chinese counter-measures would disrupt their operations.
Logistics and Shipping: Singapore’s port—one of the world’s busiest—depends on high global trade volumes. Reduced US-China trade would translate directly into reduced cargo throughput.
Trading Companies: Singapore-based commodity traders and general trading companies would face challenges if trade restrictions limit their ability to move goods between the US and China, their historically most profitable trading corridor.
Part V: Broader Regional and Global Implications
Alignment Pressures on ASEAN
Singapore’s relationship to the Association of Southeast Asian Nations (ASEAN) adds another layer of complexity. As the region’s most developed economy and a non-aligned player in US-China competition, Singapore has traditionally maintained good relations with both superpowers. However, intensifying US-China tensions force ASEAN members to choose alignments, threatening the region’s hard-won consensus on non-alignment.
If trade tensions escalate dramatically, regional members might feel compelled to choose sides—accepting US incentives and security guarantees, or accommodating Chinese preferences. Such polarization would undermine ASEAN unity and could disrupt the regional trade frameworks, including the Regional Comprehensive Economic Partnership (RCEP), that Singapore depends on for prosperity.
The TikTok Factor
The article notes that trade tensions threaten to jeopardize a potential deal regarding TikTok’s US operations. This seemingly peripheral issue carries broader significance for Singapore. The social media platform represents a flashpoint between US national security concerns and China’s leverage through technology companies. If the TikTok situation collapses, it would signal that neither side can find even limited areas for cooperation, suggesting broader economic warfare ahead.
The Defense Production Nexus
Hutong Research’s observation about rare earth leverage and defense production capacity highlights why these trade disputes carry implications far beyond economics. Disruptions to rare earth supplies directly threaten US military readiness and defense manufacturing capacity. Conversely, US export controls on advanced semiconductors and software threaten China’s ability to develop military systems and artificial intelligence capabilities competitive with American equivalents.
For Singapore, which hosts significant US military assets and maintains complex relationships with various powers, this competition creates strategic uncertainty. Singapore cannot afford to be caught between superpowers if global competition intensifies into a genuine great power conflict.
Part VI: Negotiation Prospects and Resolution Scenarios
Why Both Sides Have Left Negotiating Room
Despite the inflammatory rhetoric, both sides have strategically structured the timeline to allow for negotiation. Trump’s decision to delay tariff implementation until November 1 provides a window for talks at the South Korea summit. China’s delayed implementation of export controls a week later suggests Beijing also recognizes that immediate escalation serves neither side’s interests.
Ray Wang, lead semiconductor analyst at The Futurum Group, articulated the fundamental constraint: “The economic, security and supply-chain stakes for both sides are simply too high to sustain the current standoff indefinitely.” This assessment likely reflects the private calculations of both administrations. A 140-percent tariff regime would cause severe economic disruption in both the US and China, with unpredictable global consequences.
China’s Strategic Position
Despite Trump’s inclination toward confrontation, China possesses significant advantages in any protracted trade war. According to CF40, a Beijing-based economic think tank, “China could hedge against higher US tariffs with policy support” through stimulus measures and domestic investment. Critically, CF40 noted that “the Trump administration relies on TikTok to woo young voters, and with political pressure from the 2026 mid-term elections it has limited scope for extreme measures.”
This observation identifies a crucial asymmetry: Trump faces domestic political pressures and upcoming midterm elections that constrain his ability to sustain economically damaging tariffs, while Xi operates within a political system that prioritizes long-term strategic objectives over electoral cycles. Chinese exports have hit new records in many markets during 2025, demonstrating that Beijing can survive and even thrive in reduced-US-trade scenarios.
However, China faces its own constraints. The Chinese economy battles weak domestic demand and deflationary pressures that a huge tariff spike would exacerbate. A massive contraction in exports—previously a growth engine for China—would complicate efforts to stabilize the economy and maintain employment levels.
Likely Negotiating Positions
Both sides appear to be positioning for a negotiated settlement that allows each to claim victory while preserving core interests. The Trump administration’s October 12 signal of openness to a deal represents a classic negotiating move—introducing maximalist demands (140-percent tariffs, software curbs) while simultaneously signaling flexibility to avoid blame for breakdown.
China’s response pattern suggests Beijing might be willing to negotiate on rare earth export controls if the US moderates its tariff and software restriction proposals. The article notes that “officials from both sides could sit down again as soon as this week” when Chinese finance officials visit Washington for regular meetings. Such meetings provide informal channels for negotiation distinct from high-profile summit proceedings.
Potential Settlement Frameworks
A negotiated settlement would likely involve:
Limited Tariff Adjustments: Rather than implementing the threatened 100-percent increase, the Trump administration might settle for a smaller tariff hike of 10-15 percent, allowing it to claim toughness while avoiding catastrophic trade disruption.
Rare Earth Management Framework: China and the US might establish formal mechanisms for managing rare earth exports and ensuring supply continuity for defense applications, potentially involving strategic reserves or agreements on minimum export volumes.
Technology Transfer Constraints: Both sides could formalize understanding about permissible technology development areas, creating clear boundaries that reduce unexpected escalation.
Phased Implementation: Rather than all-or-nothing approaches, both sides might agree to phased implementation of controls, allowing time for supply chain adjustment.
Part VII: Implications for Singapore and the Region
Economic Recovery and Resilience
If negotiations succeed and tensions de-escalate, Singapore’s economy should recover relatively quickly. The island’s resilience derives from its ability to rapidly pivot in response to changing global conditions and its dominance in financial services, which remains profitable even during trade contractions. Singapore’s banks and financial institutions would benefit from a return to stable global conditions.
However, even successful negotiations would leave scars. Multinational corporations considering regional expansion have learned that Singapore’s utility depends on peaceful global trade. Some might diversify their operations to less trade-dependent locations or pursue strategies emphasizing domestic markets over export orientation.
The “De-risking” Trend
Perhaps more concerning than direct trade impacts is how these tensions contribute to broader “de-risking” trends affecting Singapore. Multinational corporations increasingly pursue strategies to reduce dependence on Chinese supply chains, often by diversifying production across multiple countries. This trend, accelerated by geopolitical tensions, historically redirects some investment from Southeast Asia toward India, Vietnam, and other emerging economies.
Singapore’s value proposition has traditionally been its role as a reliable, neutral intermediary between China and the developed West. If that role becomes less central to global supply chains—because companies prioritize geographic diversification over centralized hub operations—Singapore faces fundamental challenges to its economic model.
Regional Cooperation Opportunities
The current crisis might create opportunities for Singapore and other ASEAN members to position themselves as alternative trade hubs or neutral grounds for US-China business operations. However, realizing such opportunities requires that regional members maintain their non-aligned positions, which becomes increasingly difficult as superpower competition intensifies.
Singapore’s sophisticated diplomatic corps and established relationships with both the US and China position it well to pursue such opportunities. However, sustaining this balancing act becomes harder as great power competition deepens.
Monetary and Fiscal Policy Challenges
The MAS faces complex policy choices if trade tensions persist. Supporting growth while maintaining exchange rate stability and managing currency risks requires sophisticated policy coordination. Singapore’s government, with substantial fiscal reserves accumulated during prosperous years, could implement stimulus measures if trade contractions require support. However, such measures represent consumption of past savings rather than sustainable growth generation.
Conclusion: Singapore at the Intersection of Great Power Competition
Xi Jinping’s red line on export controls and Trump’s escalatory response represent more than bilateral trade disputes—they reflect fundamental competition between rival visions of global order. The November deadlines create a critical juncture where negotiation remains possible but breakdown becomes increasingly likely if either side misreads the other’s intentions.
For Singapore, the implications are profound. As a small, trade-dependent economy deeply integrated into global supply chains and financial systems, Singapore’s prosperity depends critically on a stable international environment and functioning global trade. The current crisis threatens both. Even if immediate negotiation succeeds in preventing full-blown trade war, the underlying competitive dynamics will likely persist, requiring Singapore to navigate increasingly complex geopolitical terrain.
Singapore’s traditional strategy of non-alignment and careful balancing between great powers becomes increasingly strained as the US and China pursue zero-sum competition in technology, rare earths, and strategic influence. The island’s future economic viability may require more fundamental adaptations than its post-war model has demanded—potentially including greater emphasis on financial services and technology innovation to reduce dependence on transit trade, and more sophisticated diplomatic efforts to maintain access to both US and Chinese markets.
The outcome of the November negotiations will reveal much about whether the US and China can establish stable competitive coexistence or whether they are destined for sustained economic and technological conflict. Singapore’s fate, to a significant degree, depends on which trajectory emerges.
Maxthon
Maxthon has set out on an ambitious journey aimed at significantly bolstering the security of web applications, fueled by a resolute commitment to safeguarding users and their confidential data. At the heart of this initiative lies a collection of sophisticated encryption protocols, which act as a robust barrier for the information exchanged between individuals and various online services. Every interaction—be it the sharing of passwords or personal information—is protected within these encrypted channels, effectively preventing unauthorised access attempts from intruders.
Maxthon private browser for online privacyThis meticulous emphasis on encryption marks merely the initial phase of Maxthon’s extensive security framework. Acknowledging that cyber threats are constantly evolving, Maxthon adopts a forward-thinking approach to user protection. The browser is engineered to adapt to emerging challenges, incorporating regular updates that promptly address any vulnerabilities that may surface. Users are strongly encouraged to activate automatic updates as part of their cybersecurity regimen, ensuring they can seamlessly take advantage of the latest fixes without any hassle.
In today’s rapidly changing digital environment, Maxthon’s unwavering commitment to ongoing security enhancement signifies not only its responsibility toward users but also its firm dedication to nurturing trust in online engagements. With each new update rolled out, users can navigate the web with peace of mind, assured that their information is continuously safeguarded against ever-emerging threats lurking in cyberspace.