the U.S.-China trade conflict has reached its peak in 2025. China's tightening of rare earth export controls has sent global financial markets reeling, with the New York stock market plunging and bitcoin crashing. we analyze the impact across the semiconductor supply chain.
on October 10, 2025, the New York Stock Exchange was bathed in red lights from the start of the trading day. the Dow Jones Industrial Average plunged 879 points, the Nasdaq plunged 3.56%, and bitcoin plunged from $126,000 to below $110,000 in a single day, sending investors into a tailspin. There was one cause: China's announcement of tighter export controls on rare earths and President Trump's threat of 100% additional tariffs on them.
the U.S.-China trade war peaked in April 2025 and then cooled off briefly with the Geneva agreement in May. But in October, the conflict flared up again when China pulled out a powerful card: rare earths. Rare earths are essential for making semiconductors, electric car batteries, advanced weapons, and more, and China controls 60% of global production and more than 90% of processing. in this article, we take a closer look at the core issue in the US-China trade conflict: rare earth export controls and the resulting shock to global financial markets.
table of Contents
- timeline of the US-China trade conflict in 2025
- background on China's Rare Earth Export Controls
- the nature of the global financial market shock
- the semiconductor supply chain crisis and the impact on Korean companies
- Frequently Asked Questions
timeline of the US-China trade conflict in 2025
since the beginning of 2025, the U.S.-China trade conflict has been the tension before the storm. On April 2, President Trump imposed astronomical tariffs of 145% on Chinese goods, and China responded with 125% retaliatory tariffs. Two days later, on April 4, China announced export controls on seven rare earth elements: samarium, gadolinium, turbium, and dysprosium.
the stock market panicked: on April 3 and 4, the S&P 500 plunged about 10%, and the Nasdaq plunged a whopping 11.77%. the market capitalization of big tech companies like Apple, Nvidia, Amazon, and others evaporated by $1.8 trillion, the worst drop since the 2020 pandemic.
a dramatic trade truce agreement reached on May 11 in Geneva, Switzerland, provided 90 days of breathing room. the US lowered tariffs from 145% to 30% and China from 125% to 10%. On August 12, markets breathed a sigh of relief when President Trump extended the truce until November 10.
but on October 9, China pulled out the rare earth card once again. it expanded controls to 12 rare earth elements, up from seven, and switched to an export license system for lithium-ion batteries and man-made diamonds. Even more shocking was a provision with offshore application, requiring foreign companies to obtain permission from the Chinese government to export products containing more than 0.1% Chinese rare earths.
background on China's tightening rare earth export controls
why are rare earths so important? rare earths, a group of 17 elements, are key materials in modern high-tech industries, from smartphones and electric vehicles to wind turbines and the F-35 fighter jet. permanent magnets made from neodymium and dysprosium are essential for electric car motors and wind turbines, while cerium oxide is used to polish semiconductor wafers. terbium and Europium make smartphone displays and LED lights brighter.
china has strategically cultivated its rare earths industry since the 1980s. deng Xiaoping famously said that the Middle East has oil, but China has rare earths. china has gained price competitiveness through loosening environmental regulations and massive government investment, forcing rare earth mines in the US and Australia to close one by one.
the October 2025 measures are the culmination of China's rare earth strategy. beyond simply blocking the export of raw materials, the ban also covers products made with Chinese rare earths or using Chinese technology. In particular, rare earths used in the production of advanced semiconductors below 14 nanometers and nand flash memory above 256 gigabytes are subject to individual review. This could be a direct hit to South Korean semiconductor companies such as Samsung Electronics and SK Hynix.
the reality of the global financial market shock
on Friday, October 10, financial markets panicked when President Trump announced that he would impose additional 100% tariffs on China starting November 1.
all three major New York stock market indexes plunged: the Dow Jones Industrial Average fell 879 points, or 1.9%, and the S&P 500 plunged 2.71%. The tech-heavy Nasdaq Composite Index plunged 3.56%, marking its worst day since April. In just one day, $2 trillion in market capitalization evaporated from the U.S. stock market.
big tech companies were particularly hard hit. amazon lost $121 billion in market capitalization, Microsoft lost $85 billion, and Tesla lost $71 billion. nvidia fell 5%, and AMD plunged a whopping 7.78%, as rare earths are essential for semiconductor equipment and materials.
the impact on the cryptocurrency market was even more dramatic. bitcoin plunged 15%, falling to $104,000 just four days after hitting $126,000 on October 6. Ethereum plunged 20%, dropping to $3,436. altcoins such as Ripple, Dogecoin, and Cardano also suffered double-digit declines. In one day alone, more than $19 billion in leveraged positions were forced to liquidate.
investors fled to safe-haven assets. the price of gold hit a new all-time high above $3,130 per ounce, silver hit a new high for the first time since 1980, and the yield on the 10-year U.S. Treasury bond fell below 4%.
semiconductor supply chain crisis and the impact on Korean companies
the biggest victim of rare earth export controls is the semiconductor industry. rare earths are used everywhere in the semiconductor manufacturing process, including wafer polishing, thin film deposition, and precision optical equipment. if China closes the rare earth valve, global semiconductor production could grind to a halt.
samsung Electronics and SK Hynix are particularly vulnerable. SK Hynix makes 40-50% of its D-RAM at its Wuxi, China fab, and 20% of its NAND flash in Dalian, China. samsung Electronics also makes 40% of its NAND Flash at its Xi'an fab. if factories in China were to shut down due to a rare earth supply disruption, the entire global memory semiconductor market could be shaken.
u.S. semiconductor companies would also be hit. nvidia gets 30% of its revenue from China and Taiwan. intel gets 27% of its revenue from Chinese customers. micron remains heavily dependent on the Chinese market, even after it received sales restrictions from the Chinese government in 2023.
the South Korean government and companies have been diversifying the rare earth supply chain. they are strengthening cooperation with rare earth producers outside of China, such as MP Materials in the US and Rynas in Australia. however, the combined rare earth production capacity of the US and Australia is only one-tenth of China's. it takes at least eight to 10 years to develop new mines and build refining facilities.
in the short term, we need to increase our strategic stockpiles, and in the medium to long term, we need to develop alternative technologies that don't use rare earths. tesla already uses rare earth-free induction motors in some of its vehicles, and Toyota is working on rare earth-free electric motor technology.
FAQ Frequently Asked Questions
Q1. When will the US-China trade conflict end?
A1. November 10 is the expiration date of the current ceasefire agreement. president Trump and President Xi Jinping are scheduled to meet at the APEC summit in South Korea at the end of October, and the outcome of those talks will likely determine whether the ceasefire will be extended. however, a complete resolution is unlikely in the short term due to deep structural differences.
Q2. How will the rare earth export control affect our lives?
A2. In the short term, it may lead to higher prices for smartphones, laptops, electric vehicles, etc. disruptions in semiconductor and battery production will lead to supply shortages and price increases. in the long term, it could manifest itself in slower growth and inflationary pressures across the high-tech industry.
Q3. What is the outlook for Samsung Electronics and SK hynix stock prices?
A3. In the short term, we expect volatility due to uncertainty. however, both companies have a dominant share of the global memory semiconductor market and are actively pursuing supply chain diversification, which is positive for the medium to long term. please make your investment decision carefully, considering your personal risk appetite and investment horizon.
Q4. Is the Bitcoin crash temporary?
A4. The October crash was caused by an external shock - the worsening US-China trade conflict - and is likely to recover once the market stabilizes. in fact, on Monday, October 13, Bitcoin rebounded to $115,000. However, the cryptocurrency market is volatile, and caution is advised when investing.
Q5. When will rare earth alternative technologies be commercialized?
A5. In some areas, it has already started. tesla's induction motors are a good example. however, abrasives for semiconductor manufacturing and high-performance permanent magnets are difficult to replace and will take 5-10 years to commercialize. realistically, the quicker solution is to find other sources of supply while reducing our dependence on China.
the bottom line
in 2025, the U.S.-China trade conflict has escalated beyond a simple tariff war to a hegemonic competition over advanced technologies and key materials. China's tightening of rare earth export controls poses a fundamental threat to the global semiconductor supply chain, and the resulting shock to global financial markets is unlikely to be resolved in the short term.
south Korean companies, including Samsung Electronics and SK Hynix, are being forced to make strategic choices between the U.S. and China. supply chain diversification, technology independence, and strategic stockpiling have never been more important.
how do you view the current US-China trade conflict? how do you think things will unfold after the ceasefire expires in November? share your thoughts in the comments. for more analysis on global economic issues, please subscribe!