Kindergarten Negotiations

Pissing contest over the weekend did not lead to a trade deal with China. T

The trade truce that many hoped would hold unraveled in one weekend of tit-for-tat
escalations. Months of simmering tension between Washington and Beijing suddenly
boiled over, spilling into multiple industries at once. Investors, markets, and companies
were left scrambling to absorb the fallout.

Markets hate surprises: The S&P 500 had its worst day since April on Friday, wiping
out $1.5T in value as investors processed what looked like a full-blown restart of the
trade war. Trump threatened to impose 100% tariffs on Chinese goods, but by Sunday,
he was already softening his tone with a post saying, “Don’t worry about China, it will all
be fine.” By Monday, stocks had rebounded as investors leaned on what Wall Street
calls the “TACO trade” — Trump Always Chickens Out — where fiery rhetoric quickly
gives way to reassurance and recovery. Even as stocks recovered, the broader impact
of renewed tensions is starting to show:

Qualcomm ($QCOM) fell 4% after China launched an antitrust probe into its
$400M Autotalks deal, adding fresh pressure to US chipmakers already tangled in
export curbs.

Beijing hit back with $56-per-ton port fees on US vessels — matching
Washington’s charges — and vowed hikes through 2028, calling America’s move a
“textbook double standard.”

The Next Trade Earthquake
What really has economists on edge is that China’s latest move goes beyond tariffs and
into supply chains. Under new rules rolling out through December, any company must
get Beijing’s approval to export products containing more than 0.1% Chinese rare earth
materials, effectively giving it leverage over whether Nvidia ($NVDA), Intel ($INTC), or
TSMC ($TSM) can sell chips in the US. The curbs don’t begin until December, while US
10/15/25, 9:33 AM

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pilling into multiple industries at once. Investors, mar