WASHINGTON:
US President Donald Trump threatened to hike tariffs on Chinese exports and cancel a meeting with President Xi Jinping, in a broadside against Beijing on Friday that sent markets and relations between the world’s largest economies into a spiral.
Trump, due to meet Xi in about three weeks in South Korea, complained on social media about what he characterised as China’s plans to hold the global economy hostage after China dramatically expanded its rare earth element export controls on Thursday.
China dominates the market for such elements, which are essential to tech manufacturing. Trump said there was no reason to hold the meeting with Xi that he had previously announced. Beijing had never confirmed the meeting between the leaders.
The remarks signalled the biggest rupture in relations in four months and immediately raised questions about whether an economic detente between Beijing and Washington – the world’s biggest factory and its biggest consumer – can survive.
Trump, a Republican has wielded tariffs paid by US importers against friends and foes. Beijing has long called for Washington to abandon unilateral trade restrictions it says undermine global commerce.
Trump said on Friday that he was weighing a “massive” increase in levies on Chinese-made goods. In his post, he added China has been sending letters to countries worldwide saying it planned to impose export controls on every element of production related to rare earths.
He said he had been contacted by unnamed countries incensed over Beijing’s steps and said he was surprised because of the “very good” recent relationship with China.
The unexpected broadside shook global financial markets, sending the benchmark S&P 500 Index sliding by 2%.
“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,” Trump said on Truth Social. “For every Element that they have been able to monopoliSe, we have two.”
He added: “I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so.” Trump had earlier said he would meet Xi on the sidelines of the Asia-Pacific Economic Cooperation forum being held in Gyeongju, South Korea, starting October 31.
A spokesperson for the US Trade Representative declined comment on what countermeasures Trump was contemplating, while a spokesperson for the US Treasury did not immediately respond to a request for comment. The two offices have led talks with Beijing on trade.
China produces over 90% of the world’s processed rare earths and rare earth magnets. Beijing on Thursday added five new elements as well as dozens of pieces of refining technology to its export-restricting control list and bound foreign producers using Chinese materials to comply with its rules.
