Taking center stage in increasing the economic tensions is Donald Trump’s recent announcement that he would threaten a further 100% tariff on Chinese products. Like many aspects of the bilateral relations between the two nations, trade ties are under severe strain. If realized, this threat will result in a severe stop to all trade. In response, China’s government condemned Trump’s remarks, labeling them “a typical example of US double standards.”
The proposed tariffs would bring even more wariness to an already sensitive and complicated trade relationship. US tariffs on Chinese imports have more than tripled from 10% at the beginning of the year to 30%. At the same time, imports of goods into China still face a 10% tariff. These tariffs have caused downstream prices to increase and created uncertainty in both markets.
The situation escalated further when China announced plans to tighten export controls on rare earths and other materials critical for advanced technology manufacturing. China processes approximately 90% of the world’s rare earths, essential components for products such as solar panels, smartphones, and electric vehicles. This move has drawn scrutiny from the United States, which has raised concerns about China’s export controls on these vital resources.
The Chinese Commerce Ministry condemned US trade policy in an extraordinary written statement to reporters. They made it clear that what they are doing with rare earths is just “normal actions” to shield national security. The spokesperson emphasized that “resorting to tariff threats is not the right way to engage with China.”
Trump’s threats have already rattled financial markets. The US S&P 500 share index tumbled 2.7%, marking its biggest drop since April. Without progress on these items, negotiations will surely break down. Trump has suggested he will cancel the meeting scheduled with Chinese President Xi Jinping later this month.
China’s Commerce Ministry still seems committed to promoting a spirit of dialogue and cooperation between the two countries. The ministry’s spokesperson agreed that such tensions were unhelpful and did not get to the crux of the tension plaguing bilateral relations.