UPDATE: US President Donald Trump has just announced he may cancel his upcoming meeting with Chinese President Xi Jinping, stating, “there seems to be no reason” to meet. This development, coming just weeks before their scheduled meeting at the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea, is sending shockwaves through global markets and international relations.
The tension escalated after China imposed new export controls on rare earth elements, crucial for tech manufacturing, prompting Trump to threaten a substantial increase in tariffs on Chinese goods. This escalation could reignite the damaging trade war between the US and China, which had shown signs of thawing earlier this year.
In a post on social media, Trump criticized China’s actions, claiming they are attempting to “hold the global economy hostage.” He highlighted that China has informed countries worldwide of plans to enforce strict export controls on all rare earth-related production elements. These elements are essential for various high-tech sectors, including electric vehicles and military equipment.
The announcement has already impacted financial markets, with the S&P 500 Index plummeting by 2 percent—its most significant drop since April. Investors are scrambling for safer assets, driving up the prices of gold and US Treasury securities, while the US dollar weakens against other currencies.
“Trump’s post could mark the beginning of the end of the tariff truce,” said Craig Singleton, a China expert at the Foundation for Defense of Democracies.
Trump’s remarks signal a significant shift in US-China relations, as they have not seen this level of discord in four months. The President’s decision to potentially skip the meeting raises urgent questions about the future of economic ties between the world’s two largest economies.
Earlier today, the Trump administration proposed measures to further restrict Chinese airlines from flying over Russia, intensifying economic tensions. Additionally, the Federal Communications Commission confirmed that major US online retailers have removed millions of listings for prohibited Chinese electronics.
China’s recent export controls include five new elements and numerous refining technologies, requiring foreign companies to obtain special approval to ship these materials. The new regulations also include strict prohibitions against exporting technologies for military applications.
China, which produces over 90 percent of the world’s processed rare earths, has long called for the US to eliminate unilateral trade restrictions that it argues undermine global commerce. As these geopolitical tensions rise, the implications for global supply chains and international markets could be severe.
As this situation develops, all eyes are on the upcoming APEC summit starting on October 31, 2023. Will Trump and Xi find a way to bridge the gap, or is a full-blown trade war on the horizon? Stay tuned for updates as this story unfolds.
