US Raises Tariffs on Chinese Steel and Aluminum to 50%

On June 4, 2025, the United States implemented a significant policy change by raising tariffs on Chinese steel and aluminum to 50%. This move was a direct response to perceived unfair trade practices by China. The US government, under the leadership of President Biden, emphasized the necessity of these measures to protect American workers and firms. Janet L. Yellen, US Secretary of the Treasury, stated that the actions were part of a strategic and targeted response to long-standing unfair trade practices by China.

In retaliation, China's State Council announced additional tariffs on US goods, with effective rates rising up to 54% on certain products. This escalation in tariffs has heightened economic tensions between the two nations, leading to increased volatility in financial markets. Economic analysts predict that this volatility could affect various sectors, including cryptocurrency markets, which have historically reacted to such tensions with fluctuations in digital asset prices.

Despite the absence of significant shifts in the crypto market, previous trade wars have coincided with increased liquidity in decentralized finance protocols. Investors are exercising caution, and the market remains sensitive to broader economic conditions and policy changes. Historically, trade tensions have prompted increased stablecoin activity as investors seek security amidst volatility. This could affect DeFi platforms and crypto exchanges, although no direct impacts on specific cryptocurrencies have been observed yet.

The United States and China have reached a significant milestone in their ongoing trade negotiations, confirming the framework of a trade deal that aims to reduce punitive tariff hikes imposed during the escalation of the trade war. The agreement, reached in May, marks a partial truce in a conflict that has disrupted global supply chains for years. The deal includes a reduction in some tariffs and the resumption of rare earth exports from China to the United States, which could stabilize supply chains for industries such as automotive and aerospace.

However, the agreement is not without its challenges. Certain higher tariffs remain in place, including a 20% duty on fentanyl-related goods and 50% levies on steel. These lingering disputes over technology, intellectual property, and industrial goods ensure that volatility remains a significant risk. Analysts warn that prolonged disputes in these areas could reignite trade tensions, despite the short-term reprieve provided by the deal.

The agreement's most significant shift lies in the rare earths and related commodities. China's agreement to streamline exports removes a bottleneck for industries reliant on neodymium for magnets and lithium for batteries. This benefits semiconductor manufacturers and electric vehicle producers that had faced rising input costs. The deal also positions ASEAN as a strategic hub for critical minerals, with nations becoming key suppliers of nickel, cobalt, and rare earths. The U.S. is already courting these nations via bilateral agreements, which could further secure rare earth dominance.

The ASEAN Economic Community's 2026-2030 plan aims to harmonize trade rules and double intra-regional trade, while its Digital Economy Framework Agreement (DEFA) could unlock a $1 trillion tech sector by 2030. This economic integration presents opportunities for investors in tech infrastructure, renewables, green tech, and regional logistics. Companies expanding 5G and cloud networks, as well as those involved in geothermal projects and polysilicon initiatives, stand to benefit from this regional diversification.

The partial trade deal announced in June 2025 offers a fragile truce, easing immediate pressures by resolving the rare earth impasse. However, the path ahead remains uncertain, with short-term caution and long-term opportunities coexisting. Investors should focus on sectors with regional diversification and commodity exposure tied to electric vehicle and tech demand. The playbook for navigating this landscape involves leaning into clarity while keeping an eye on the horizon for potential future storms.