China accuses US of 'double standards' over tariff threat

Background

Ahead of the upcoming APEC summit at the end of this month, U.S.–China trade tensions have once again intensified. In response to Washington’s continued restrictions on AI chip exports, Beijing has launched a series of countermeasures. On October 9, China announced tighter export controls on rare earth materials. Following its antitrust investigation into NVIDIA, Chinese regulators on October 10 opened a new probe into Qualcomm and instructed ports nationwide to step up inspections of NVIDIA chip imports. On the same day, President Trump retaliated by declaring that, starting November 1, a 100% tariff would be imposed on Chinese goods, along with broad export controls on all key software technologies. The U.S. Trade Representative (USTR) also announced that beginning October 14, all Chinese-built or -operated vessels entering U.S. ports would be subject to additional fees. In response, China swiftly introduced a ‘special port fee’ on U.S. ships as a countermeasure.

Commentary

Trump’s tariff announcement triggered a broad market sell-off last Friday, sending U.S. equities, cryptocurrencies, and crude oil prices sharply lower, with Asian markets following the downturn on Monday. Analysts largely interpreted this flurry of trade restrictions and retaliations as a strategic positioning by both sides ahead of APEC negotiations.

Interestingly, Trump struck a more conciliatory tone the following day (Sunday), assuring that the meeting had not been canceled and that ‘everything will be fine.’ The market interpreted this as yet another example of the ‘TACO’ pattern—Trump Always Chickens Out. This shift in sentiment drove a strong rebound in U.S. equities on Monday, with all four major indices closing higher; the Philadelphia Semiconductor Index surged 4.93%, leading the gains.

We believe that since the tariff war in April, the U.S. stock market has been on a steady upward trend. In recent weeks, U.S. technology companies have continued to pour substantial capital and form partnerships in AI infrastructure and long-term demand development, further driving the market higher. As a result, overall valuations have reached elevated levels. Given this backdrop, market sensitivity to U.S.–China trade tensions has increased. The latest round of reciprocal sanctions between the two sides may, in fact, serve as an opportunity for investors to realize profits and rebalance their positions.