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US President Donald Trump has threatened to impose 100% tariffs on Chinese imports starting November 1 or sooner, with rates likely to rise further after months of a trade truce between the two countries.
President Trump also said in a post on Truth Social that his administration would “impose export controls on all kinds of critical software.”
President Trump expressed frustration with China after the country imposed new export restrictions on rare earth elements needed in a wide range of products, from jet engines, radar systems and electric vehicles to consumer electronics such as laptops and cell phones.
President Trump called the move “extremely hostile” and threatened to cancel a meeting with Chinese leader Xi Jinping scheduled for later this month in South Korea. He said on social media that there “seems to be no reason” to meet with Xi.
He later told reporters that he had not canceled the meeting, but “I don’t know if it will happen or not,” adding: “I think it will probably happen because I plan to attend regardless.”
President Trump also suggested there may be time to gradually ease the threat of new high tariffs. “We’ll have to see what happens. That’s why we did it on November 1st,” he said.
China’s new regulations
China accounts for almost 70% of the world’s rare earth mining. It also controls approximately 90% of the world’s rare earth processing. Access to such materials is a key issue in U.S.-China trade talks.
Export regulations announced Thursday require foreign companies to obtain special approvals to transport metal elements overseas.
It also announced licensing requirements for exports of technology used to mine, smelt and recycle rare earths, adding that requests to export products used in military supplies would be denied.
President Trump said China is holding the world “in captivity” by restricting access to metals and magnets used in electronics, computer chips, lasers, jet engines and other technologies.
The S&P 500 fell 2.7% on concerns about rising tensions between the world’s largest economies. It was the worst day for markets since April, the last time the president ranted about import taxes this high. Still, the stock market closed before the president could spell out the terms of his threat.
Not only could the global trade war instigated by President Trump be reignited, but mounting import taxes on top of the 30% already levied on Chinese goods could cause a collapse in U.S.-China trade and slow global economic growth, according to past statements from the administration.
President Trump’s rhetoric was decisive, but he also famously backed away from threats. Earlier this year, some investors began participating in what the Financial Times called “TACO” trades, short for “Trump Always Chickens Out.”
The United States and China are vying for the upper hand in trade negotiations after import taxes announced earlier this year triggered a trade war.
The two countries agreed to gradually reduce tariffs following negotiations in Switzerland and the UK, but tensions remain as China continues to restrict US access to hard-to-extract rare earths needed for a wide range of US technologies.
Additional sources of information • AP
