Trade Dispute Cools After Rare-Earth Jolt; Experts Urge Calm and See Limited Lasting Damage

China’s move to tighten controls on rare-earth exports has rattled technology supply chains, but market strategists and analysts say the flare-up is easing and unlikely to derail the sector’s broader trajectory. The near-term policy backdrop in Washington—where the White House in August extended a suspension of certain China-specific tariffs into November—remains a factor, though no longer the central driver of sentiment.

Beijing’s restrictions, set to take effect Dec. 1, initially sparked a risk-off move in technology shares on fears of component delays and higher costs. Wedbush analysts characterized the episode as a “war of words” that is likely to “settle down,” calling it a buying opportunity. The firm pointed to a Truth Social post in which President Donald Trump wrote, “Don’t worry about China, it will all be fine!” and said “cooler heads will prevail,” adding that the “November 1 tariff threat overhang will ultimately be removed.”

Semiconductor exposure to rare earths is tangible but manageable, according to CFRA Research’s Angelo Zino. “We believe greater sanctions on rare earth compounds by China have negative implications to the U.S. chip industry, with the potential to create supply chain disruptions/manufacturing delays,” Zino wrote, while maintaining a constructive stance on leading chipmakers. He added that despite tariff threats, the firm expects “all-important Trump-Xi negotiations to progress in the coming months,” noting that several U.S. chip companies “have zeroed out data center China revenue” and that the industry is awaiting clarity on potential “232 semiconductor” tariffs, from which it is “exempt for now.”

Tariff's still pose a threat to U.S. consumers. According to a Bloomberg report on an October 12 Goldman Sachs client note, the firm's economists projected that American consumers will ultimately absorb 55% of the tariff burden, while U.S. companies will cover 22% and foreign exporters 18%. The analysts also warned that tariffs have already boosted the core Personal Consumption Expenditures inflation measure by 0.44 percentage point this year, potentially pushing it to 3% by the end of December.

China may be in a stronger negotiating position than earlier this year. Reuters reported that China’s exports “bounced back in September,” with the economy’s strategy of “diversified [export] markets” helping “keep GDP growth on track towards a roughly 5% target for the year.” Still, risks remain if tariff threats escalate. As Julian Evans-Pritchard of Capital Economics told Reuters, “While China’s economy has proven more resilient in the face of U.S. tariffs than many had feared, there is still significant potential downside from a deeper rift with the U.S.”

In Washington, the tariff backdrop was adjusted earlier in the summer. An Aug. 11 executive order extended a 90-day suspension—first enacted in May—of certain additional ad valorem duties on imports from China, continuing the pause “until 12:01 a.m. eastern standard time on November 10, 2025,” while negotiations proceed. Agencies were directed to “take all necessary actions to implement and effectuate this order.”

The policy mix leaves corporate planners watching two clocks: Beijing’s Dec. 1 export controls and Washington’s tariff timetable. For now, expert commentary tilts toward de-escalation—at least in markets. Wedbush argued “the bark will be way worse than bite,” while CFRA expects negotiations to “progress in the coming months.”