US-China Tariff Escalation Sends Oil Prices Lower, Sparks Fears of Economic Decoupling

Oil prices fell sharply as trade tensions intensified between the United States and China, following President Donald Trump’s announcement of a 100% tariff on Chinese imports. In retaliation, Beijing expanded its rare-earth export controls, signaling a readiness to weaponize its dominance in global supply chains ahead of the 90-day truce deadline. Rystad Energy’s chief economist Claudio Galimberti warned that the situation could accelerate an economic decoupling between the two powers.

US-China Tariff Escalation

China currently refines up to 80% of the world’s rare-earth materials, which are critical to defense and electric-vehicle manufacturing. The new restrictions target high-end magnet and chip-grade materials, heightening supply risks if talks fail after November. Market fallout was immediate, with US equities sliding, Asian currencies weakening, and gold surging past $4,200 per ounce as investors sought safety.

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