Trump tariffs for rare earths move risk trade war

China on Sunday said “we are not afraid of” a trade war with the United States after President Donald Trump vowed to impose punishing new retaliatory tariffs on Chinese imports.

A spokesperson for China’s Ministry of Commerce accused the U.S. of a “textbook double standard” with Trump’s promise on Friday to tack on additional 100% tariffs on those imports after China imposed new export controls on rare earths minerals.

That promise in a social media post by the president shook U.S. stock markets on Friday, erasing $2 trillion in equity values in a single day.

Willful threats of high tariffs are not the right way to get along with China,” the ministry spokesperson said.

“China’s position on the trade war is consistent: we do not want it, but we are not afraid of it,” they added.

The spokesperson said that the United States “for a long time … has been overstretching the concept of national security, abusing export control, taking discriminatory actions against China, and imposing unilateral long-arm jurisdiction measures on various products, including semiconductor equipment and chips.”

The U.S. Commerce Control list covers more than 3,000 items, more than three times the approximately 900 items on China’s Export Control List of Dual-use Items, the spokesperson said.

China called its export controls on rare earth exports a “legitimate” measure under international law, pushing back against U.S. accusations of economic coercion.

The Commerce Ministry said the controls, issued Thursday, were part of Beijing’s effort to strengthen its export control system and “better safeguard world peace and regional stability” amid what it described as a turbulent global security environment.

The measures, which now cover not only rare earth materials but also related intellectual property and technologies, were announced just weeks before a potential meeting between Trump and Chinese leader Xi Jinping.

“These controls do not constitute export bans. Applications that meet the requirements will be approved,” the Commerce Ministry spokesperson said.

“China has fully assessed the potential impact of these measures on the supply chain and is confident that the impact will be very limited.”

Beijing’s new curbs also require foreign entities to obtain a license to export products containing more than 0.1% of domestically-sourced rare earths, or manufactured using China’s extraction, refining, magnet-making or recycling technology. Applications for items that could be used in weapons or other military purposes will be denied.

Shortly after Beijing tightened export controls on rare earths, the European Chamber of Commerce in China reported a backlog of export license applications awaiting approval, saying the new restrictions “add further complexity to the global supply chains of rare earth elements.”

In response to Beijing’s move, Trump on Friday announced new tariffs of 100% on imports from China “over and above any Tariff that they are currently paying” beginning Nov. 1.

Trump also said that the U.S., on that same date, would also impose export controls on “any and all critical software.”

Stock markets plunged after Trump said on Truth Social that “there is no way that China should be allowed to hold the World ‘captive'” with its rare earths policy.

China accounts for about 70% of the global supply of rare earths and has repeatedly used the critically needed minerals as a bargaining chip in trade discussions.

Hours after tightening export controls on rare earths, Beijing also announced that it would start charging U.S. ships docking at Chinese ports from Oct. 14, mirroring a new U.S. fee on Chinese vessels arriving at U.S. ports, set to take effect the same day.

The U.S. accounts for only 0.1% of global shipbuilding, compared to 53.3% for China, according to the Center for Strategic and International Studies.

China’s Commerce Ministry defended its reciprocal decision as “necessary passive defensive actions.” It added that the U.S. actions “seriously undermined the atmosphere of the economic and trade talks between the two sides.”

Senior U.S. and Chinese officials met for trade negotiations in Geneva in May — the first since Trump launched a global trade war. A follow-up meeting in London in June led to a trade “framework,” while a third round of high-level talks took place a month later in Stockholm, where both sides signaled progress in negotiations.

The most recent trade meetings in Madrid in September yielded a “basic framework consensus” on the divestment of Chinese-owned TikTok, ahead of a deadline to either sell off its U.S. business or shut down the social media app in the country.

On Sept. 19, Trump and Xi spoke on the phone but did not finalize a deal on TikTok. After the call, Trump announced that he and Xi agreed to meet on the sidelines of the Asia-Pacific Economic Cooperation forum during the last week of October in Gyeongju, South Korea.

While China has been silent on future meetings, Trump had also said he would visit China early next year and that Xi would come to the U.S. at a later date.

However, Trump on Friday threatened in a social media post to cancel his upcoming meeting with Xi after China’s latest tightening of export curbs on rare earths.

— CNBC’s Dan Mangan, Anniek Bao and Evelyn Cheng contributed to this story.