On Friday, stocks took a sharp downturn after President Trump indicated he might impose new “massive” tariffs on China, following Beijing’s announcement of new export control regulations.
In a post, Trump mentioned that his administration is weighing various responses to China’s recent restrictions on rare metal exports. This includes potential “significant increases in tariffs on Chinese products” and limitations on U.S. exports to China.
Trump expressed his surprise at China’s moves, stating, “As President of the United States, I will be forced to counter their moves economically.” He continued, “For every element they were able to monopolize, we have two,” reflecting his shock at the situation. He added, “I never thought this would happen, but perhaps, like all things, the time has come.”
His comments and the looming threat of increased tariffs unsettled Wall Street as markets prepared for a three-day weekend ahead of Monday’s federal holiday. The Dow Jones Industrial Average plummeted by 876 points, closing down 1.9%. The S&P 500 Index decreased by 2.7%, while the tech-heavy Nasdaq Composite Index dropped 3.6% before the market closed.
China holds approximately 70% of the world’s rare metals and rare earths, vital materials for manufacturing semiconductor chips. Both the U.S. and China are intensifying efforts to safeguard their semiconductor production capabilities and limit cooperation, each vying for an advantage in the artificial intelligence competition.
Beijing’s new regulations mandate that Chinese companies obtain “individual approvals” to export rare earths and other semiconductor materials, including techniques necessary for processing these metals into semiconductor components.
Friday marked a notable setback in U.S.-China relations after several months of negotiations, which followed Trump imposing tariffs on Chinese goods. There were expectations that Trump and Xi would meet at the upcoming Asia-Pacific Economic Cooperation (APEC) summit to finalize a trade agreement.
However, Trump remarked, “there doesn’t seem to be any reason to do that,” implying that Xi was attempting to downplay the news of a potential ceasefire between Israel and Hamas. He criticized the timing of China’s announcements, suggesting it was especially inappropriate given the developments in the Middle East, questioning if it was merely a coincidence.
