{"id":63995,"date":"2025-10-13T09:04:15","date_gmt":"2025-10-13T07:04:15","guid":{"rendered":"https:\/\/www.captrader.com\/?post_type=analyse&p=63995"},"modified":"2025-10-14T12:28:02","modified_gmt":"2025-10-14T10:28:02","slug":"sp-500-between-fear-and-taco-opportunity","status":"publish","type":"analyse","link":"https:\/\/www.captrader.com\/en\/analyse\/sp-500-zwischen-angst-und-taco-chance\/","title":{"rendered":"S&P 500 between fear and TACO opportunity"},"content":{"rendered":"

Dear traders, dear stock market friends.<\/p>\n\n\n\n

After the S&P 500 initially continued to rise in the past trading week and reached new all-time highs, this was followed by a sharp sell-off on Friday. The reason for the slump was a topic that had almost been forgotten: the trade dispute between the USA and China.<\/p>\n\n\n\n

130 % Tariffs for Chinese imports?<\/h2>\n\n\n\n

The latest market turbulence was triggered by an announcement made by President Donald Trump on social media late on Friday afternoon. In his post, Trump announced that the United States would impose an additional 100 percent tariff on Chinese goods from November 1, 2025, on top of existing tariffs. This would raise the total tariffs on Chinese imports to around 130 percent.<\/p>\n\n\n\n

Tariffs are a reaction to China's export controls<\/h3>\n\n\n\n

Trump justified this step with China's \"extraordinarily aggressive\" trade position, which had been communicated in an \"extremely hostile letter to the world\". In this letter, China announced that it would impose far-reaching export controls on practically all of its products from November 1, 2025, which Trump said was \"absolutely outrageous in international trade\" and \"a moral disgrace in dealing with other nations\".<\/p>\n\n\n\n

Rare earths as a geopolitical weapon<\/h3>\n\n\n\n

However, the background to the renewed escalation in the tariff dispute goes beyond the immediate announcement on Friday. On Thursday, October 9, China's Ministry of Commerce actually announced new export restrictions on rare earths, which were to come into force on December 1, 2025. China controls more than 90 percent of the world's rare earth processing and rare earth magnet production. These materials are essential for many high-tech applications, from smartphones and electric vehicles to wind turbines and military equipment.<\/p>\n\n\n\n

The export controls announced by China affect seven medium and heavy rare earths, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium.<\/p>\n\n\n\n

China is applying the Foreign Direct Product Rule, a mechanism originally developed and used by the US to cut off Chinese technology companies from American semiconductor technology. Under this new Chinese regulation, foreign companies must obtain approval from the Chinese government to export magnets that contain even traces of Chinese rare earths or are manufactured using Chinese technology, even if these products are manufactured outside China. The threshold is a content of only 0.1 percent or more of rare earths of Chinese origin.<\/p>\n\n\n\n

Rare earths are crucial for the US military<\/h3>\n\n\n\n

The strategic importance of these materials is particularly critical to the U.S. defense industry. Rare earths are essential components of many military systems, including F-35 fighter jets, Virginia- and Columbia-class submarines, Tomahawk missiles, radar systems, Predator drones and the Joint Direct Attack Munition series of smart bombs. For example, an F-35 fighter jet contains over 900 pounds of rare earths, while an Arleigh Burke-class destroyer requires about 5,200 pounds and a Virginia-class submarine uses about 9,200 pounds. <\/p>\n\n\n\n

The United States is therefore particularly vulnerable to disruptions in the supply chain of heavy rare earths. A refinery in Vietnam that had served as an alternative source has been closed for over a year due to a tax dispute, effectively giving China a monopoly on supply.<\/p>\n\n\n\n

Mutual dependencies<\/h3>\n\n\n\n

China's use of rare earths as a geopolitical weapon is nothing new. However, the announcement on October 9 went much further and signaled China's willingness to use its dominant position in critical supply chains even more aggressively.<\/p>\n\n\n\n

Trump also announced that the United States would impose export controls on all critical software from November 1. <\/p>\n\n\n\n

The reciprocal nature of these restrictions - American semiconductor technology versus Chinese rare earths and critical minerals - is on the one hand a sign of mutual dependencies and vulnerabilities, but on the other hand also fuels the hope that an agreement will be reached in the medium term.<\/p>\n\n\n\n

Real danger or TACO trade?<\/h2>\n\n\n\n

After Trump's latest tariff announcement, the key question is: will the tariffs actually be implemented this time? Or will they be rolled back shortly, as is so often the case? It is precisely this recurring pattern that has led to the term TACO trade (\u201eTrump Always Chickens Out\u201c) over the past six months. The pattern was as follows:<\/p>\n\n\n\n