U.S. President Donald Trump threatened to impose "massive" new tariffs on Chinese goods and suggested canceling a planned meeting with Chinese President Xi Jinping, reigniting trade tensions between the world's two largest economies after Beijing moved to tighten control over rare-earth exports critical to global manufacturing.
In a series of posts on his Truth Social platform Friday, Trump accused China of attempting to "hold the world economy hostage" after its Commerce Ministry expanded export restrictions on rare earths - elements essential for electric vehicles, advanced weaponry, and high-tech production. "Ultimately, though potentially painful, it will be a very good thing, in the end, for the U.S.A.," Trump wrote. "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."
Beijing's new export order, announced Thursday, added five materials and dozens of refining technologies to its control list, requiring foreign producers to comply with Chinese regulations. China, which produces more than 90% of the world's processed rare earths, has long used its dominant position as leverage in geopolitical disputes. The move prompted warnings from Washington that it could further destabilize global supply chains.
The renewed confrontation comes just months after the two governments reached a fragile tariff truce, with U.S. duties on Chinese imports falling to 30% from highs of 145%, and Beijing lowering its retaliatory tariffs on U.S. goods to 10%. Trump had previously described relations with China as "excellent," but on Friday he declared there was "no reason" to proceed with his upcoming meeting with Xi in South Korea. "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," he said.
The threat sent global markets into a tailspin. The S&P 500 fell 2%, its largest one-day drop since April, while the Dow Jones Industrial Average slid 0.8% and London's FTSE 100 dropped 0.9%. Investors fled to safe havens such as gold and U.S. Treasurys, and the dollar weakened against major currencies. "Trump's post could mark the beginning of the end of the tariff truce," said Craig Singleton, a China analyst at the Foundation for Defense of Democracies. "Beijing appears to have overplayed its hand."
Trump accused China of planning to impose export limits on "every element of production related to rare earths," calling the move "a rather sinister and hostile act." He added, "There is no way that China should be allowed to hold the world 'captive,' but that seems to have been their plan for quite some time, starting with the 'magnets' and other elements they have quietly amassed into somewhat of a monopoly position."
U.S. trade officials did not immediately comment on potential countermeasures. However, the administration has already moved to restrict Chinese airlines from using Russian airspace for U.S.-bound flights, and the Federal Communications Commission announced Friday that millions of prohibited Chinese electronic listings had been removed from online retail platforms.
Beijing has yet to publicly respond to Trump's latest remarks. The Chinese embassy in Washington did not issue a comment, and state media merely reiterated the government's view that rare-earth policies are based on national security needs.
