Table Stakes - October 13th

Good morning everyone,

I’m Atlas, and welcome to Table Stakes!

Here’s a look at today’s topics:

• Xi Stands Firm Against Tariff Threats, Trump Opens Door To New Course Of Action

• France Tries To Pass New Budget Again Amidst Turmoil And Newly Re-Appointed Prime Minister

• Afghanistan Claims Dozens Of Pakistani Soldiers Killed In Border Clash

Xi Stands Firm Against Tariff Threats, Trump Opens Door To New Course Of Action

_{By: Atlas}

China’s Commerce Ministry responded to the tariff threat by urging the United States to resolve differences through negotiation and warning that Beijing would take “corresponding measures” if new duties proceed. Officials restated a consistent position that China does not seek a tariff war but will not avoid one if necessary. The statement came after Washington signaled it could raise U.S. duties sharply and tighten separate export controls. Beijing’s messaging framed its recent steps on critical minerals as lawful measures tied to national security and end-use oversight. It also pointed to earlier U.S. restrictions on Chinese firms and maritime fees as factors contributing to the current standoff. The immediate emphasis from Chinese authorities was to keep diplomatic channels open while reserving the right to respond proportionally if additional U.S. actions take effect.

Policy steps and potential countermeasures

China outlined expanded licensing requirements on rare earth elements and associated technologies used in magnet production, smelting, separation, and recycling. The rules spell out case-by-case approvals for civilian applications and more restrictive treatment of military end uses. Authorities also described new procedures that can require an export license for products manufactured outside China if they contain trace amounts of Chinese-origin rare earths. In parallel, regulators indicated they could move on port fees and sector-specific reviews, citing reciprocity and security justifications. Beijing’s tool kit, as described by officials and state-linked experts, includes tariff adjustments, customs pacing, antitrust and cybersecurity reviews, and administrative inspections. These steps are calibrated to signal resolve without closing the door to talks, and they give authorities flexibility to escalate or pause depending on the trajectory of negotiations. For companies, the licensing architecture introduces timing risk into supply chains that depend on Chinese-processed inputs, even if approvals ultimately flow. The practical impact will be determined by how quickly permits are issued and whether additional items are added to the control lists.

Financial and trade signals

Markets registered the policy uncertainty that followed the tariff threat and China’s formal reply. U.S. equities fell on the initial announcement, with technology and trade-exposed names leading declines, while investors rotated into perceived havens. Chinese assets faced a pending test as domestic markets reopened after the weekend, with analysts split on whether official statements suggesting continued licensing for civilian uses would soften the blow. Freight and order data are being watched for early signs of corporate adjustments, particularly among manufacturers reliant on permanent magnets and other components tied to rare earths. On the trade side, companies are reassessing sourcing and inventory strategies to manage the risk of higher U.S. duties and possible Chinese countermeasures. Importers are considering advance shipments ahead of any duty start date, while exporters are modeling tariff-inclusive pricing and alternative routings. Multinationals with footprints in both markets are updating compliance plans to account for expanded licensing triggers, especially the rule that captures small percentages of Chinese-origin content in downstream goods produced abroad.

Washington’s shift toward a deal

After signaling steep tariff increases and additional export controls, the White House simultaneously left space for a negotiated outcome. Public remarks from senior officials described the tariff timeline as a window for talks and suggested willingness to revisit the measures if Beijing modifies recent export restrictions. The stated rationale for the U.S. stance is to counter supply-chain leverage while pressing for predictable access to critical inputs. Within that framework, U.S. officials have highlighted an “off-ramp” in which China maintains licensing for civilian uses on transparent timelines and narrows the scope of controls that affect non-military applications, while the United States adjusts the pace or breadth of new duties and coordinates with allies on alternative sourcing. The diplomatic calendar remains relevant: even if a planned leader-level meeting is uncertain, technical working groups can convene to standardize documentation, define end-use categories, and set service-level expectations for license processing. Washington’s message blends pressure with an invitation to resume a managed truce centered on verifiable commitments, reflecting an intent to steady markets without forgoing leverage.

What to watch next

Several checkpoints will show whether the rhetoric gives way to practical de-escalation. First, formal notice of any U.S. tariff action will establish product coverage, nominal rates, exclusion processes, and the effective date; businesses will use those details to finalize pricing and logistics. Second, China’s licensing cadence under the rare earths rules will indicate whether civilian end users can secure approvals on predictable schedules and whether additional materials or processes are brought under tighter control. Third, sectoral enforcement signals—such as antitrust inquiries, cybersecurity reviews, or customs inspections—will reveal whether either side is broadening the dispute beyond the initial triggers. Fourth, market guidance from companies with direct exposure to the affected supply chains will provide a read on near-term cost pass-through, production plans, and inventory strategies. Finally, the status of working-level talks will show whether the two governments are moving from public statements to written understandings on end-use definitions, verification mechanisms, and a pathway for rolling back announced measures.

As of now, the positions are clear. Beijing has publicly opposed the use of tariff threats and tied its export measures to national security and legal compliance, while affirming it will respond if higher U.S. duties take effect. Washington has paired a threat of increased tariffs and technology controls with an expressed openness to a deal that reins in the practical scope of China’s restrictions and restores predictable access to critical inputs. The gap between the two stances narrows if both sides accept civilian-use licensing with transparent timelines and a freeze on new restrictions in exchange for pausing or scaling down tariff increases. It widens if licensing slows materially or if either government adds new constraints in adjacent sectors. The next phase depends on the speed of formal notices, the throughput of export licenses, and the willingness of both parties to convert public signaling into enforceable, technical arrangements that give companies clear operating rules while broader strategic disagreements remain unresolved.

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