President Trump lashed out at China on Friday, saying on social media that he will impose a 100% tariff on Chinese imports starting on November 1 in response to the country’s new curbs on the export of rare earths, critical components used in many types of advanced manufacturing.
In addition to the tariff, which will be applied on top of existing import levies, the U.S. will impose export controls on all “critical software.”
Saying “very strange things are happening in China,” Trump criticized the new restrictions on exports of the materials that China announced earlier this week, claiming they would “clog” global markets, to the detriment of every country in the world. Among other things, the new rules require companies to obtain a special export license from China if any of the goods they send out of the country contain more than 0.1% of rare earths as measured by value.
In response to what he referred to as an act of “great Trade hostility,” Trump also hinted that he may skip a meeting with China’s leader scheduled in two weeks. “I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so,” Trump said, referring to the Asia-Pacific Economic Cooperation summit that will take place at the end of October.
Trump added that China’s actions were “especially inappropriate” at a time when he had just brought peace to the Middle East “after three thousand years of bedlam and fighting.”
Tensions rising: In a replay of the time in April when Trump announced his “Liberation Day” tariffs on trading partners around the world, investors sent stocks sharply lower in response to Trump’s bellicose threats and the prospect of an intensifying trade war. The Dow Jones Industrial Average fell 878 points, or 1.9%, while the S&P 500 fell 182 points, or 2.7%. Treasury yields fell, too, with the rate on the U.S. 10-year dropping to 4.06%.
Jay Hatfield, chief executive at Infrastructure Capital Advisors, told The Wall Street Journal that Trump’s threats introduce a new note of volatility into the markets. “It’s definitely the biggest uncertainty we’ve had since the tariff tantrum,” he said.
Another group that is sure to be disappointed by Friday’s turn of events: American farmers, who lost one of their biggest buyers earlier this year when China stopped by soybeans in response to Trump’s trade hostilities.
Caleb Ragland, a Kentuckian who leads the American Soybean Association, said his organization is “extremely disappointed” that the meeting between Trump and Xi might be canceled. “Trade wars are harmful to everyone,” he told The New York Times, “and these latest developments are deeply disappointing at a moment when soybean farmers are facing an ever-growing financial crisis.”