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US Stocks Plunge as Trade War with China Intensifies
10 Oct
Summary
- US stocks drop sharply on escalating US-China trade tensions
- Rare earth mineral stocks surge amid supply chain disruptions
- Tech firms hit hard by tariffs, rising yields, and AI overvaluation
On October 10, 2025, US stock markets experienced a sharp decline as President Trump announced plans for a "massive increase" in tariffs on Chinese imports. The Dow Jones Industrial Average dropped 1.05% to 45,873, the S&P 500 fell 0.8%, and the Nasdaq Composite, heavy in tech stocks, slid nearly 2%.
Investors reacted to escalating trade tensions between the US and China. Trump canceled a planned meeting with Chinese President Xi Jinping and warned of strong US counteractions, including steep tariff hikes. This came after China imposed export controls on rare earth minerals and new port fees on American ships.
The market turmoil was further exacerbated by concerns over corporate earnings, rising bond yields, and the potential overvaluation of AI-related stocks. Technology firms sensitive to trade friction, such as AMD, Nvidia, and Tesla, saw significant losses. Meanwhile, shares of US rare earth mineral companies like MP Materials and USA Rare Earth surged around 15% as markets priced in supply chain disruptions.
Investors remain cautious amid ongoing economic and geopolitical uncertainties, including the 10-day US government shutdown that has delayed key economic reports. The sudden market drop caught many retail investors by surprise, as they had expected steady gains after weeks of positive sentiment.
Looking ahead, the focus shifts to next week's earnings season, with major banks like JPMorgan and Citigroup expected to report. Analysts anticipate that tariffs and trade tensions may weigh on corporate performance and revenue.
