Journalism of Courage
US President Donald Trump on Friday threatened to sharply increase tariffs on Chinese imports and cancel a planned meeting with President Xi Jinping, in a broadside that sent markets and relations between the world’s two largest economies into a tailspin.
Trump, who was due to meet Xi in about three weeks in South Korea, accused Beijing on Truth Social of “holding the global economy hostage” after China dramatically expanded its export controls on rare earth materials on Thursday.
“I never thought it would come to this but perhaps, as with all things, the time has come,” Trump wrote, claiming: “Ultimately, though potentially painful, it will be a very good thing, in the end, for the USA.”
He said there was “no reason” to proceed with the meeting that he had previously announced — one that Beijing had never publicly confirmed. Trump also warned of a “massive” tariff hike on US imports from China, raising fears of a renewed tit-for-tat trade war that both sides had paused earlier this year after months of delicate diplomacy.
“One of the Policies that we are calculating at this moment is a massive increase of Tariffs on Chinese products coming into the United States of America. There are many other countermeasures that are, likewise, under serious consideration.”
In his post, Trump said China had sent letters to other countries indicating plans to impose export controls on “every element of production related to rare earths.”
“Dependent on what China says about the hostile ‘order’ that they have just put out, I will be forced, as President of the United States of America, to financially counter their move,” Trump wrote on Truth Social. “For every element that they have been able to monopolize, we have two.”
He added: “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.”
The President’s comments immediately rattled financial markets. The benchmark S&P 500 index slid 2%, while investors flocked to safe havens, pushing US Treasury yields lower and lifting gold prices. The dollar weakened against a basket of major currencies.
China’s latest move added five new elements to its export control list and increased scrutiny on semiconductor manufacturers. It also placed dozens of refining technologies under new restrictions and required foreign producers using Chinese rare earths to comply with its rules.
China accounts for more than 90% of the world’s processed rare earths and magnets, which are critical components in products ranging from electric vehicles to aircraft engines and military radar systems.
Trump earlier this year, repeatedly hiked US tariffs on Chinese goods, amid spiraling tensions between the two countries, to a peak of 145 per cent. Beijing hit back, raising its own tariffs on US exports to 125 per cent.
But after talks between officials, US tariffs on Chinese products fell to 30 per cent, while Chinese tariffs on US goods dropped to 10 per cent.
