Trump threatens to impose “huge” tariffs on China amid a heated dispute over minerals

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Donald Trump has warned that he is considering a “massive increase” in US tariffs on China and threatened to cancel his scheduled summit with Xi Jinping, reigniting trade tensions between the two countries.

On Friday, the US President accused China of becoming “very hostile” in reference to its recent decision to impose sanctions Export controls on critical minerals.

Trump He said in a post on Truth Social that the US had been contacted by “other countries that are very angry about this major trade hostility, which came out of nowhere.”

These comments impacted markets immediately, with the S&P 500 falling as much as 1.7 percent and the Nasdaq Composite falling as much as 2.5 percent. The yield on two-year US Treasury bonds fell to its lowest level in three weeks, while the dollar fell 0.6 percent against a basket of currencies.

The president proposed canceling the meeting that the American and Chinese leaders intended to hold during the APEC forum in South Korea at the end of October. International companies considered the planned meeting a step towards stabilizing US-Chinese relations.

Commenting on Chinese export controls, Trump said: “This was a real surprise, not only to me, but to all the leaders of the free world.” “I was scheduled to meet President Xi in two weeks, at the Asia-Pacific Economic Cooperation (APEC) forum in South Korea, but now there seems to be no reason to do so.”

China on Wednesday unveiled a sweeping package of measures that will disrupt global supplies of rare earths and important minerals. The move was widely seen as an attempt to create leverage ahead of the leaders’ summit, their first meeting during Trump’s second term.

Under the new Chinese rules, foreign companies must obtain permission from Beijing to export important magnets and other products containing even small amounts of rare earth elements originating from China.

“No one has ever seen anything like this before, but it would, basically, clog up the markets and make life difficult for almost every country in the world, especially for China,” Trump said in his post.

Trump’s threat to impose heavy new tariffs on China raises the possibility that the two countries will return to the all-out trade war that broke out earlier this year when Trump imposed 145% tariffs on Beijing, and Xi responded by imposing 125% tariffs on goods coming from the United States.

The trade war had a significant impact on trade flows, which US Treasury Secretary Scott Besent said at the time amounted to an actual trade embargo.