US President Donald Trump has said he would impose an additional 100% tariff on imports from China starting next month. In a post on social media, Trump stated that the US would also implement export controls on critical software.
Trump's remarks followed China's recent move to tighten rules on rare earth exports, leading him to accuse Beijing of becoming 'very hostile' and attempting to hold the world 'captive.'
He indicated a potential withdrawal from an upcoming meeting with China's President Xi Jinping, although he later clarified his attendance would depend on developments.
The comments sent financial markets into a tailspin, with the S&P 500 experiencing its steepest drop since April, closing down 2.7%.
China produces the majority of rare earths crucial for various technologies including smartphones and electric vehicles. The last instance of China tightening its exports led to significant disruptions for many American companies, including Ford.
Compounding tensions, China has opened a monopoly investigation into US tech giant Qualcomm, which may delay its acquisition of another chipmaker. Further, Beijing announced it would introduce new port fees for ships linked to the US, raising concerns among American entities.
Trump expressed bewilderment regarding these developments in China, stating, 'Some very strange things are happening in China!'
Since May, the US and China had been experiencing a fragile trade peace with both sides lifting previous tariffs. However, these latest actions indicate a possible return to increased hostilities bordering on trade warfare.
Experts note that while a meeting between Trump and Xi has become uncertain, negotiations remain critical, especially in light of the new export rules that won't take effect until December.
