Nations Caught Between US and China: How are trade commodities affected?

Trade tensions between China and the US have been ongoing since 2018 and escalated into a full-scale trade war in 2025. Various issues have led to the fragile situation that is present now, including the Trump administration’s massive tariff increases, China’s retaliatory measures, and further tariff escalations. The consequences have a ripple effect and have affected many aspects, including commodities.

Commodities were affected because, first and foremost, they are a core part of the trade between the US, China, and other countries. The nations involved in the fiasco, especially China and the US, leveraged the most essential commodities as strategic political and economic tools. Here are a few that were affected the most:

Rare Earth Metals

When the US imposed its 25% tariff, China retaliated by enacting stringent export controls on seven rare earth metals, including samarium, gadolinium, and terbium. These are used to manufacture crucial items, from optical lasers, personal stereos, low-energy lightbulbs, high-performance magnets, camera lenses, and superconductors. This issue forced the US and other countries to ramp up funding for rare earth metal projects in different countries, including Africa, Canada, and Australia.

Energy

Global energy trade flow has also been affected by the 2025 US-China flare-up. China, for starters, has cut the amount of crude oil it imports from the US and redirected most of its purchases toward Iran, Russia, and other countries. The Chinese administration has also slashed LNG orders from US exporters in favor of long-term contracts from Russia’s Novatek, QatarEnergy, and other suppliers. If you’re interested in energy products, consider trading CFDs on energy markets. But first, familiarize yourself with what is the real CFD meaning in financial markets.

Agricultural Commodities

The US-China fiasco has significantly impacted the global agricultural landscape, influencing everything from supply to prices. China has reduced the amount of soybeans it imports from the US and turned towards suppliers in Argentina and Brazil, forcing these countries to ramp up their output to match the increasing demand. Xi Jinping’s administration has diversified its corn and wheat suppliers and increased imports from Russia, Australia, and Ukraine.

Semiconductors

The semiconductor supply chain has always been complicated, but US-China trade tensions have worsened the situation. The US administration has placed tighter controls on semiconductor manufacturing equipment and chip designs sold to Xi Jinping’s country. On the other hand, China has tried to lessen the impact of this move by ramping up its investment in domestic chip research, development, and manufacturing. Other countries, including Japan, have taken advantage by partnering with either China or the US and investing in semiconductor materials, R&D, and more.

Final Thoughts

The escalated US-China trade war has rattled the global markets and affected almost all crucial commodities, not just the ones mentioned here. Others include metals, cotton, tech goods, fertilizers, and more.

Some countries, like Vietnam, have positioned themselves as alternative suppliers and benefited from this issue. However, the situation might change after the recent US-China truce; keep an eye out for further developments.