- The Chinese government has not yet made any official announcement of a meeting, despite Trump announcing it recently
US President Donald Trump on Friday appeared to cancel a planned meeting with Chinese President Xi Jinping, accusing Beijing of “hostile” trade behaviour after it further expanded export controls on rare earth elements and threatening “massive” tariffs.
In a lengthy social media post, Trump said: “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,” Trump said on Truth Social Friday. “There are many other countermeasures that are, likewise, under serious consideration.”
“This was a real surprise, not only to me, but to all the Leaders of the Free World. 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 said.
Trump said the new restrictions were “a rather sinister and hostile move” that sought to hold the world “captive.”
Trump also hinted at potential tit-for-tat export restrictions to China.
The U.S.-China trade relationship was already tense ahead of a planned meeting between the world leaders in South Korea, and China’s latest move threatens to reignite the countries’ trade war.
China announced export controls on a range of minerals the U.S. desperately needs to power the AI boom and other key sectors, like defense.
It was widely seen as a play to gain leverage in trade talks, but the economic damage to the U.S. would be extensive if Beijing followed through because the U.S. does not currently have the capacity to replace Chinese rare earth minerals.
The Chinese threat and Trump’s bellicose response could signal a breakdown in the surprisingly stable superpower relationship we’ve seen over the last several months, or it could be a bit of brinksmanship that ultimately results in a trade agreement.
The stock market took a hit after Trump’s post, with the Dow Industrial Average dropping about 500 points and the S&P 500 falling more than 1%.
The new restrictions could be especially harmful to the semiconductor and defense industries, which already took a hit from other export controls China announced in April.
Some of the new measures will take effect before the 90-day trade truce between the U.S. and China is set to expire.
China is in the early stages of figuring out how impactful its exports controls can be, as Axios’ Courtenay Brown previously reported.
These restrictions will cause a blow to the U.S. in the short term, but over time, China could lose its monopoly on rare earth processing as the U.S. ramps up its domestic production.
Written with reports from Axios