In a dramatic escalation of tensions between the United States and China, President Donald Trump has threatened to withdraw from an anticipated meeting with Chinese President Xi Jinping. The move comes in response to Beijing’s recent tightening of export controls on rare earths, a critical component in various high-tech industries. Trump took to social media to express his discontent, stating he saw ‘no reason’ to proceed with the meeting and accusing China of adopting a ‘very hostile’ stance, aiming to ‘hold the world captive.’
Adding fuel to the fire, Trump warned of a ‘massive’ increase in tariffs on Chinese goods, reigniting fears of a renewed trade war between the two economic superpowers. The announcement sent shockwaves through financial markets, with the S&P 500 dropping approximately 1.4% in late morning trading in New York.
China’s recent actions extend beyond rare earths. Beijing has launched a monopoly investigation into U.S. tech giant Qualcomm, potentially disrupting its acquisition of another chipmaker. Despite being headquartered in the U.S., Qualcomm relies heavily on its Chinese operations. Additionally, China has announced new port fees targeting ships linked to the U.S., including those owned or operated by American firms.
Trump’s frustration was evident in a social media post on Friday, where he remarked, ‘Some very strange things are happening in China! They are becoming very hostile.’ The U.S. and China have maintained a fragile trade détente since May, when both sides agreed to roll back triple-digit tariffs that had nearly halted bilateral trade. Since then, officials have engaged in discussions on various issues, including TikTok, agricultural purchases, and the trade of advanced technology and rare earths.
Jonathan Czin, a China expert at the Brookings Institution, suggested that Xi’s recent moves are strategic efforts to influence upcoming negotiations with the U.S. He noted that the rare earths directive does not take immediate effect, indicating a calculated approach. ‘He’s looking for ways to seize the initiative,’ Czin said. ‘The Trump administration is having to play a game of whack-a-mole and deal with these issues as they come up.’
Czin also expressed skepticism that China is concerned about U.S. retaliation, citing Beijing’s belief in its higher pain threshold during previous tariff escalations. ‘From their perspective, the Trump administration blinked,’ he added.