US President Donald Trump has stated that he would impose an additional 100% tariff on imports from China starting next month. In a social media post, he also indicated that there would be export controls on critical software.
This bold declaration came in response to China's recent actions tightening export regulations on rare earths, a crucial group of materials essential for various technologies, where Trump accused Beijing of 'becoming very hostile' and attempting to exert undue influence over global markets.
Trump further threatened to withdraw from an upcoming meeting with China's President Xi Jinping, though he later suggested the meeting might still occur, stating, I'm going to be there regardless, while addressing reporters at the White House.
The response in the financial markets was immediate, with the S&P 500 index dropping by 2.7%, marking its steepest decline since April.
Trump's threats come amid a backdrop of China dominating the production of rare earths, which are vital components in many everyday products including cars and smartphones. The last time Beijing imposed stricter controls on these exports was after a prior increase in tariffs, prompting significant backlash from U.S. companies heavily dependent on these materials.
In conjunction with tightening rules on rare earth exports, China has initiated a monopoly investigation against U.S. tech giant Qualcomm, potentially hindering its expansion efforts and acquisitions in the chipmaking industry. Although Qualcomm is based in the U.S., it conducts significant business in China.
China has also announced new port fees for vessels linked to U.S. interests, adding to the current climate of tension.
In a follow-up tweet, Trump remarked, Some very strange things are happening in China! They are becoming very hostile. Since May, the U.S. and China had been in a fragile trade détente after agreeing to alleviate triple-digit tariffs that had previously stifled trade.
The ongoing negotiations had included discussions surrounding TikTok, agricultural imports, and trade of rare earth materials and advanced technology like semiconductors. A summit in South Korea was anticipated to be the next venue for further discussions.
Experts suggest that if China's new export regulations do not take effect until December, there remains time for negotiation. The tensions could escalate, especially if the focus involves critical industries, but some analysts maintain that Trump's administration may need to adapt quickly to stabilize relations.
