US President Donald Trump threatened a “massive increase” of tariffs on goods from China and to cancel an upcoming meeting with the country’s leader, Xi Jinping, citing recent “hostile” export controls Beijing placed on rare-earth minerals.
“I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so,” Trump posted Friday on social media.
The president added that one form of retaliation the US is considering “is a massive increase of Tariffs on Chinese products coming into the United States of America,” adding that “there are many other countermeasures that are, likewise, under serious consideration.”
Markets recoiled at the president’s comments, which portended fresh trade tensions between the world’s two largest economies. The S&P 500 fell more than 1.5 percent. The Nasdaq 100 fell as much as 2.4 percent, the most since April 30. Chicago soybean futures fell as much as 1.9 percent to $10.0275 a bushel, hitting session lows after the post. The intraday decline is the biggest since July 7.
The announcement puts in doubt not only the agenda for Trump’s planned trip to Asia, which included a meeting with Xi later this month at the Asia-Pacific Economic Cooperation summit, but also the future of negotiations over China’s refusal to purchase US soybeans, which has hammered American farmers.
“This back and forth indicates the fragility of the bilateral relationship,” said Wendy Cutler, a former US trade negotiator. “It is by no means certain that cooler heads will prevail leading to a de-escalation in time” for the leaders’ planned meeting.
The post follows a series of moves by both the US and China to potentially curb flows of technology and materials between the countries — which had been seen as ways to gain an edge ahead of the presidents’ planned meeting in Asia.
In the most recent action, China slapped new port fees on US ships and started an antitrust investigation into Qualcomm Inc. — following fresh efforts to restrict the flow of rare-earth minerals needed to make numerous consumer products, including motors, semiconductors and fighter jets.
Those materials have been at the centre of trade brinkmanship between Washington and Beijing. After Trump hiked tariffs on Chinese imports earlier this year, China’s government responded by cutting off mineral exports to US companies. Officials from both sides agreed to a truce in the spring, under which Trump lowered duties and Xi’s officials agreed to resume the flow of the minerals.
But on Thursday, China required that overseas exporters of items that use even traces of certain rare earths to obtain an export license, according to the Ministry of Commerce, citing national-security concerns. Some equipment and technology for processing rare earths and making magnets will also be subject to controls, the ministry said in a separate release.
While not specifically outlining the US’s next steps, Trump said he would be “forced” to “financially counter their move” outlined in what he said were letters from China to other trading partners. “For every Element that they have been able to monopolize, we have two,” Trump posted.
Trump’s comments mark an abrupt change in tone even from Thursday, when he expressed optimism that he could convince Xi to end China’s moratorium on US soybean buys and said of the Chinese leader, “he’s got things that he wants to discuss with me, and I have things that I want to discuss with him.”
Tensions have fluctuated for months between the US and China as the two sides have jockeyed for leverage across a range of issues up for negotiation, including tariffs, countering fentanyl flows, soybeans, export controls, and the fate of Chinese-owned social media giant TikTok’s US operations. The latest trade truce between the economies suspended elevated US duties on China until November.
“Our relationship with China over the past six months has been a very good one, thereby making this move on Trade an even more surprising one,” Trump said in his especially lengthy Friday Truth Social post. “I have always felt that they’ve been lying in wait, and now, as usual, I have been proven right!”
Trump claimed that he’d heard from other global trading partners who he said had received similar letters and were “extremely angry at this great Trade hostility” from China.
The president also expressed annoyance at the timing of the Chinese letters, coming as he’s planning to visit the Middle East to herald a peace deal he helped broker between Israel and Hamas.
“The Chinese letters were especially inappropriate in that this was the Day that, after three thousand years of bedlam and fighting, there is PEACE IN THE MIDDLE EAST,” Trump wrote.
By Jennifer A. Dlouhy
