In a strong response to President Donald Trump’s recent threat to impose an additional 100% tariff on Chinese imports, the Chinese government has accused the United States of exhibiting double standards in its trade practices. A spokesperson from China’s Ministry of Commerce criticized the move, suggesting it reflects a pattern of unfair treatment and hinted at the possibility of unspecified countermeasures if the threat is executed. The spokesperson emphasized that China is “not afraid” of a potential trade war.
Escalation in rhetoric between Washington and Beijing
On Friday, Trump condemned China’s decision to tighten regulations on rare earth exports, labeling the nation “very hostile” and suggesting that it is attempting to “hold the world captive.” He also indicated a willingness to cancel an upcoming meeting with President Xi Jinping scheduled for later this month. However, in a subsequent message on social media, Trump attempted to downplay concerns about China, stating: “Don’t worry about China, it will all be fine!” He expressed his desire to aid, rather than harm, China’s economy, referring to Xi as a “highly respected President” who merely faced a “bad moment”.
Impact on financial markets and trade relations
Trump’s remarks have significantly impacted financial markets, with the S&P 500 index experiencing its most substantial decline since April, down by 2.7%. Meanwhile, the Shenzhen Component Index in mainland China dropped by over 2.5%, and Hong Kong’s Hang Seng Index fell approximately 3.5%. These developments have rekindled fears of a brewing trade war between the two global powers.
In May, both nations had reached an agreement to alleviate triple-digit tariffs on each other’s goods, but the current situation complicates those efforts. At present, U.S. tariffs on Chinese products now include an additional 30% levy since the beginning of the year, whereas Chinese imports to the U.S. face a 10% tariff.
The Chinese government’s recent communications, as conveyed by the Commerce Ministry, echoed sentiments from earlier stages of the trade conflict, criticizing U.S. export restrictions on semiconductor technology while defending their own export controls on rare earth materials as standard measures for national security. The spokesperson claimed that the U.S. has “overstretched the concept of national security” and engaged in “discriminatory practices against China.”
Furthermore, they asserted, “Resorting to tariff threats is not the right way to engage with China. China’s position on a tariff war has always been consistent: we do not want one, but we are not afraid of one.”
Last week, China reiterated its commitment to tightening export controls on rare earth materials, critical for advanced technology manufacturing. This move is notably significant as China is responsible for approximately 90% of the global supply of rare earths, essential for the production of various high-tech products, including solar panels and smartphones.
The escalating exchanges between Washington and Beijing are perceived by analysts as strategic maneuvers aimed at strengthening their positions ahead of imminent trade negotiations. As of now, it remains uncertain whether the anticipated meeting between Trump and Xi at a summit in South Korea will take place as planned.