US President Donald Trump has threatened to increase tariffs on Chinese exports and indicated that he may not meet with Chinese President Xi Jinping during an upcoming summit in South Korea. His comments follow China’s recent decision to impose new export controls on rare earth elements, which are critical for technology manufacturing. This development has raised concerns about the future of trade relations between the world’s two largest economies.
During a post on social media, Trump expressed frustration with what he described as China’s attempts to “hold the global economy hostage.” He stated that there appears to be “no reason” to hold the planned meeting with Xi, which was set to occur on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum in Gyeongju, South Korea, starting on October 31, 2023.
Chinese officials have not confirmed the meeting, and Trump’s remarks signal a significant deterioration in US-China relations, the most serious setback in four months. As both countries navigate the complexities of their economic interdependence, questions arise regarding the sustainability of the current détente.
Trump’s administration has long utilized tariffs as a tool to exert pressure on foreign nations. On October 27, 2023, he announced consideration of a “massive” increase in tariffs on Chinese goods, a step that could reignite a damaging trade war that had been temporarily paused following extensive diplomatic efforts earlier this year.
China has previously decried unilateral trade restrictions imposed by the US, arguing that they undermine global commerce. The recent trade tensions have already begun to impact financial markets. Following Trump’s announcement, the benchmark S&P 500 Index dropped by 2 percent, marking its steepest decline since April. Investors sought safety in gold and US Treasury securities, leading to a weakening of the US dollar against other currencies.
According to Craig Singleton, a China expert at the Foundation for Defense of Democracies, Trump’s statements could signal the end of the tariff truce. He emphasized that the US administration views China’s export control measures as a betrayal, suggesting that Beijing may have overestimated its position.
In his social media post, Trump highlighted that China has been communicating with various countries regarding its plans to impose export controls on all elements related to rare earth production. He noted that he had received messages from countries expressing anger over China’s recent actions, indicating a growing international concern regarding the situation.
Trump stated, “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 further claimed, “For every element that they have been able to monopolize, we have two.”
The US administration’s tensions with China have been escalating recently. On October 26, 2023, the US proposed banning Chinese airlines from flying over Russia on routes to and from the United States. Additionally, the Federal Communications Commission announced that major US online retail platforms have removed millions of listings for prohibited Chinese electronics.
China’s recent move to impose export controls involved adding five new elements and numerous refining technologies to its restricted list. This action mandates that foreign companies obtain special approval for shipping these metallic elements. Furthermore, Chinese authorities have instituted permitting requirements for technologies related to mining, smelting, and recycling rare earths, with a strict prohibition on exporting products intended for military use.
China currently accounts for over 90 percent of the world’s processed rare earths and rare earth magnets. These materials are essential for a wide range of products, including electric vehicles, aircraft engines, and military radars.
As global economic dynamics shift, the ongoing tensions between the United States and China will continue to shape international markets and diplomatic relations in the coming months.
