US stocks dropped amid intensyfiying US-China trade tensions. Weekly market recap, trading week 41/2025

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🔥🔥 GLOBAL MARKETS INVESTOR PORTFOLIO — UP 53% SINCE JANUARY 2024 DURING THE MARCH-APRIL 2025 MARKET TURMOIL, MAJOR US INDEXES FELL NEARLY 20%, WHILE THE GMI PORTFOLIO GAINED OVER 5%, FIND OUT HOW BELOW:

In this series, you can find financial markets posts with the highest number of interactions from my X platform feed over the most recent week. I am aware that not everybody uses X regularly, so I thought it could provide some value to your analysis, and investment process. These posts are surrounded by extra charts, commentary and explanations of complicated topics.

US stocks fell this week after President Trump threatened a “massive increase” in tariffs on China and said there was “no reason” to meet with Chinese President Xi Jinping.

On Friday, the S&P 500 fell -2.7%, the biggest decline since April 10. Investors rushed into US Treasuries and gold, instead while the US Dollar recorded the best week in 2025.

This came after China unveiled sweeping new restrictions on rare earth and critical material exports, requiring foreign exporters using Chinese-sourced rare earths to obtain an export license, citing national security concerns.

China also sent a letter to President Trump, effective November 1, 2025, imposing large-scale export controls on virtually all Chinese-made products.

More about China’s restrictions in the following posts.

Subsequently, S&P 500 futures extended drop to -3.3% after President Trump unveiled a 100% tariff on Chinese imports effective November 1 and imposed export controls on critical software. Trump’s new tariffs would lift total import taxes on many Chinese goods to 130% starting next month, just below the 145% peak reached earlier this year before both sides eased duties in a temporary truce.

Trump said he could roll back the tariff hike if China withdraws its rare earth restrictions and added that he has not canceled his meeting with President Xi, saying he “might still” hold it. This suggests there will be some negotiations between both parties until the end of the month.

The chart below presents full Friday’s price action of the Nasdaq 100 ETF, $QQQ ( ▲ 1.97% ) .

As a reminder, China dominates the global rare earths supply chain:

Meanwhile, China’s Commerce Ministry said on Sunday its countermeasures are “necessary defensive actions” and urged the US to return to dialogue.

It clarified that rare earth export controls are not a full export ban and that eligible applications will continue to receive licenses.

Beijing said the impact on global supply chains will be “minimal” and reaffirmed it is “not afraid” of a trade war.

Is this de-escalation?

In case you missed it, other posts from this week are listed below.

1) Weekly performance. In the first post attached, you can see last week’s performance of the major US indexes, the VIX volatility index, 10-year Treasury yield, the US Dollar, gold, silver, WTI Crude oil and Bitcoin.

- S&P 500 -2.4%
- Nasdaq -2.5%
- Dow Jones -2.7%
- Russell 2000 (small caps) -3.3%
- US 10-year Treasury yield -9 bps
- VIX +32%, front month VIX futures +19%
- US Dollar index +1.3%
- Silver -1.9%
- Gold +3.2%
- WTI Crude Oil -4.2%

- Bitcoin -9.3%

For the trading week ending October 17, key events are:

- Fed Chair Powell Speech on Tuesday

- US Retail Sales for September on Thursday

- US PPI Inflation for September on Thursday

- US Industrial Production for September on Friday

- At least 10 Fed Speeches

Notably, the US Labor Department will release the September CPI report on October 24, even if the government shutdown continues. It will come just 5 days before the October Fed meeting.

2) Institutional investors are still dumping US equities.

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