Economy·Tariffs and tradeAsia expect Trump’s China tariffs will backfire as gold jumps and the dollar ‘is not looking looking healthy’By Jason MaBy Jason MaWeekend EditorJason MaWeekend EditorJason Ma is the weekend editor at Fortune, where he covers , the economy, finance, and housing.SEE FULL BIO Chinese President Xi Jinping and U.S.
President Donald Trump in Beijing on Nov.
9, 2017.Thomas Peter—Pool viaGetty ImagesFinancial suffered a rerun of their swoon in April, when “Liberation Day” tariffs shocked global investors, signaling that his China duties may end up hurting the U.S.
more than their int target. On Friday, President Donald Trump said he will impose an additional 100% tariff on China and limit U.S.
exports of software, after China restricted its exports of rare earths. The S&P 500 sank 2.7%, its worst selloff since April 10. Meanwhile, the U.S.
dollar index plunged nearly 0.7% as Treasury yields fell, while gold prices surged more than 1.5%.
“ are again thinking that the US holds the shorter straw in the tariff fight with China,” Robin Brooks, a senior fellow at the Brookings Institution, wrote on Substack on Saturday.
China has a stranglehold on rare earths, ducing more than 90% of the world’s cessed rare earths and rare earth magnets. That has served as a key source of leverage over the U.S.
The divergence between the dollar and gold is notable because stock market selloffs historically have sent investors to the dollar as a safe haven.
But the fallout from Liberation Day, that dollar pattern didn’t hold, and gold instead was the preferred refuge from trade war chaos.
Brooks pointed out that the dollar had been stable in recent weeks even as gold prices soared, notching record high after record high. That with Friday’s China tariff announcement from Trump.
“This is now the second instance where are trading tariffs as backfiring on the US, not on the rest of the world,” he added.
Considering how stocks, currencies and gold reacted on Friday, Brooks said the overall picture is that the dollar actually looks more vulnerable now than it did in early April.
In particular, he pointed to how much the dollar fell when weighed alongside the steep drop in stocks, which ordinarily boosts the greenback amid a flight to safety.
“The fact that this didn’t happen and that gold prices rose more than on ‘Liberation Day’ is concerning,” Brooks warned.
“The Dollar is not looking healthy.” Before the tariff flare-up, U.S.-China trade talks had been gressing after Trump reached deals with the European Union, Japan, South Korea and other top trading partners.
But tensions remained, including on the issue of rare earths while the U.S. had moved to restrict other countries’ exports of semiconductor-related ducts to China. Also this week, the U.S.
announced port fees on Chinese ships, mpting Beijing to impose a similar fee on U.S. ships docking at Chinese ports. China also launched an antitrust investigation into U.S. chipmaker Qualcomm.
Then on Thursday, China’s commerce ministry said that starting on Dec.
1 a license will be required for foreign companies to export ducts with more than 0.1% of rare earths from China or that are made with Chinese duction nology.
“In other words, the United States can cut China off from the chips of today, but China can make it vastly harder to build the chips and other advanced nologies of tomorrow,” Michael Froman, president of the Council on Foreign Relations and a former U.S.
Trade Representative, said in a post on Friday. Fortune Global Forum returns Oct. 26–27, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of .
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