WASHINGTON: US President Donald Trump announced an additional 100 percent tariff on China Friday and threatened to cancel a summit with Xi Jinping, reigniting his trade war with Beijing in a row over export curbs on rare earth minerals.
Trump said the extra levies, plus US export controls on “any and all critical software,” would come into effect from November 1 in retaliation for what he called Beijing’s “extraordinarily aggressive” moves.
“It is impossible to believe that China would have taken such an action, but they have, and the rest is History,” he said on Truth Social.
Stock markets fell as the simmering trade war between the United States and China reignited, with the Nasdaq down 3.6 percent and the S&P 500 down 2.7 percent.
Chinese goods currently face US tariffs of 30 percent under tariffs that Trump brought in while accusing Beijing of aiding in the fentanyl trade, and over alleged unfair practices.
China’s retaliatory tariffs are currently at 10 percent.
Trump had threatened the tariffs hours earlier in a lengthy surprise post on his Truth Social network that said China had sent letters to countries around the world detailing export controls on rare earth minerals.
Rare earth elements are critical to manufacturing everything from smartphones and electric vehicles to military hardware and renewable energy technology. China dominates global production and processing of these materials.
“There is no way that China should be allowed to hold the World ‘captive,’” Trump wrote, describing China’s stance as “very hostile.”
The US president then called into question his plans to meet Chinese president Xi at the Asia-Pacific Economic Cooperation (APEC) summit later this month.
It was to be the first encounter between the leaders of the world’s two largest economies since Trump returned to power in January.
“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,” he wrote.
Trump later told reporters in the Oval Office that he hadn’t canceled the meeting.
“I haven’t canceled, but I don’t know that we’re going to have it. But I’m going to be there regardless, so I would assume we might have it,” he said.
‘Lying in wait’
On Thursday, the Chinese government restricted access to the rare earths ahead of the scheduled Trump-Xi meeting. Beijing would require foreign companies to get special approval for shipping the metallic elements aboard. It also announced permitting requirements on exports of technologies used in the mining, smelting and recycling of rare earths, adding that any export requests for products used in military goods would be rejected.
The US president said he did not understand why China was choosing to act now. “Some very strange things are happening in China! ” he said.
Trump said that China is “becoming very hostile” and that it’s holding the world “captive” by restricting access to the metals and magnets used in electronics, computer chips, lasers, jet engines and other technologies.
He said other countries had contacted the United States expressing anger over China’s “great Trade hostility, which came out of nowhere.”
He also accused Beijing of “lying in wait” despite what he characterized as six months of good relations, which has notably seen progress on bringing TikTok’s US operations under American control as required by a law passed by Congress last year.
“I have not spoken to President Xi because there was no reason to do so,” Trump posted. “This was a real surprise, not only to me, but to all the Leaders of the Free World.”
The US president said the move on rare earths was “especially inappropriate” given the announcement of a ceasefire between Israel and Hamas in Gaza so that the remaining hostages from Hamas’ Oct. 7, 2023, attack can be released. He raised the possibility without evidence that China was trying to steal the moment from him for his role in the ceasefire, saying on social media, “I wonder if that timing was coincidental?”
His outburst comes just weeks after he had spoken of the importance of meeting Xi at the APEC summit and said that he would travel to China next year.
Washington and Beijing engaged in a tit-for-tat tariffs war earlier this year that threatened to effectively halt trade between the world’s two largest economies.
Both sides eventually agreed to de-escalate tensions but the truce has been shaky.
Trump said last week that he would push Xi on US soybean purchases as American farmers, a key voting demographic in his 2024 election win, grapple with fallout from his trade wars.
China had said earlier Friday that it would impose “special port fees” on ships operated by and built in the United States after Washington announced charges for Chinese-linked ships in April.
In a further development, the US communications watchdog said it had successfully managed to get “millions” of listings for banned Chinese items removed from commerce platforms.
“The Communist Party of China is engaged in a multi-prong effort to insert insecure devices into Americans’ homes and businesses,” Brendan Carr, head of the Federal Communications Commission, said on X.
Trump’s trade war
The outbreak of a tariff-fueled trade war between the US and China initially caused the world economy to shudder over the possibility of global commerce collapsing. Trump imposed tariffs totaling 145 percent on Chinese goods, with China responding with import taxes of 125 percent on American products.
The taxes were so high as to effectively be a blockade on trade between the countries. That led to negotiations that reduced the tariff charged by the US government to 30 percent and the rate imposed by China to 10 percent so that further talks could take place. But differences continue over America’s access to rare earths from China, US restrictions on China’s ability to import advanced computer chips, sales of American-grown soybeans and a series of tit-for-tat port fees being levied by both countries starting on Tuesday.
There is already a backlog of export license applications from Beijing’s previous round of export controls on rare earth elements, and the latest announcements “add further complexity to the global supply chain of rare earth elements,” the European Union Chamber of Commerce in China said in a statement.
Just what Trump’s threat meant was open to interpretation, as it could simply be an attempt to gain some leverage under the belief that China has overplayed its hand or an ominous sign of trade tensions leading to potentially destructive increase in tariff rates.
How analysts see moves by US and China
Cole McFaul, a research fellow at Georgetown University’s Center for Security and Emerging Technology, said that Trump appeared in his post to be readying for talks on the possibility that China had overplayed its hand. By contrast, China sees itself as having come out ahead when the two countries have engaged in talks.
“From Beijing’s point of view, they’re in a moment where they’re feeling a lot of confidence about their ability to handle the Trump administration,” McFaul said. “Their impression is they’ve come to the negotiating table and extracted key concessions.”
Craig Singleton, senior director of the China program at the Foundation for Defense of Democracies, a think tank, said Trump’s post could “mark the beginning of the end of the tariff truce” that had lowered the tax rates charged by both countries.
It’s still unclear how Trump intends to follow through on his threats and how China plans to respond.
“But the risk is clear: Mutually assured disruption between the two sides is no longer a metaphor,” Singleton said. “Both sides are reaching for their economic weapons at the same time, and neither seems willing to back down.”
