The third anniversary of the bull market took an unexpected turn on Friday as President Donald Trump’s latest comments on China sent shockwaves through financial markets, erasing 2% from the S&P 500 in a single trading session. What was expected to be a modest celebration of America’s longest stretch of market gains in a decade quickly transformed into another episode of geopolitical brinkmanship, this time over the world’s most strategic resources: rare earth metals and a fresh round of Chinese import restrictions.
Investors entered Friday morning with cautious optimism. The S&P 500 had drifted higher for much of the week, setting fresh record highs along the way. But by midday, sentiment had shifted sharply after Trump issued a lengthy Truth Social post stating, among other things, that the U.S. is considering a “massive increase of Tariffs on Chinese products” coming into the U.S.
“Some very strange things are happening in China!” Trump wrote against the backdrop of a scheduled meeting later in October with President Xi Jinping in South Korea, ahead of the Asia-Pacific Economic Cooperation summit. Trump wrote that China is “becoming very hostile,” arguing that the export controls on rare earths would clog world markets for the precious resource. Repeatedly in 2025, Trump’s tariffs-heavy trade regime has been countered by China, which holds the trump card of rare earths, essential for high-tech manufacturing.
The S&P 500 slid 2% in afternoon trading, while the Dow Jones Industrial Average dropped more than 600 points. Tech and green energy sectors, both heavily reliant on rare earth minerals such as neodymium and dysprosium, bore the brunt of the sell-off.
Rare Earths and Real Risks
Rare earth elements — a group of 17 metals critical for producing everything from smartphones and wind turbines to missile guidance systems — have long been a choke point in U.S.–China relations. China controls more than 60% of global production and nearly 90% of processing capacity.
Trump’s post accused Beijing of “a rather sinister and hostile move, to say the least.” He said he had not spoken to his Chinese counterpart, but that he was surprised by the new restrictions, and that there “seems to be no reason” to go ahead with meeting Xi in two weeks’ time.
Chinese tech companies saw steep declines, with Alibaba, Baidu, and JD.com among the hardest hit; Alibaba dropped 10%, Baidu over 8%, and JD.com by more than 6%. U.S. technology stocks with significant China exposure, like Nvidia, AMD, and Tesla, also fell; Nvidia lost 2.4%, AMD dropped 5.8%, and Tesla slipped 3.9%.
Companies tied to rare earth minerals, on the other hand, saw dramatic gains. MP Materials rose by as much as 15%, USA Rare Earth surged as much as 19%, and NioCorp Developments climbed by 8%.
