Trump threatens China with new tariffs and ‘countermeasures’

President Donald Trump on Friday threatened a “massive” increase in tariffs on Chinese goods, which would shake markets and add a new dose of uncertainty to trade relations between the world’s largest economies.

China has become “very hostile” on trade issues, Trump said in an explosive Truth Social article. “I was supposed to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so.” The leaders were expected to announce a full-fledged trade deal at the meeting.

On Thursday, China announced a series of new limits on the trade of rare earths and related technologies.

A spokesperson for the Chinese Embassy in Washington, D.C., did not immediately respond to a request for comment on Trump’s post.

The announcements from China and Trump represent a sudden escalation of a trade war that appeared to be calming down. The perceived certainty of an upcoming deal with China has pushed stocks higher. But President Truth Social’s message released Friday immediately sent U.S. stocks to session lows, with the S&P 500 falling more than 1% after trading earlier in positive territory. The Nasdaq, which includes many technology companies operating in China, fell about 2%.

New Chinese trade regulations require foreign companies to obtain special permission to export items containing even small traces of rare earth elements from China. These essential minerals are needed in a wide range of products, from jet engines, radar systems and electric vehicles to consumer electronics, including laptops and phones.

China and the United States have held more than three rounds of trade talks this year, with rare earths, TikTok and tariffs high on the agenda. After discussions in May in Geneva, the administration said China had decided to ease controls on rare earth exports.

In June, the two sides met again in London, where they announced a new agreement on this issue. After these discussions, the United States said it expected the issue to be “resolved.”

In a Truth Social article after these negotiations, Trump declared that “our deal with China is done.”

“The complete magnets and all the necessary rare earths will be supplied by China from the outset,” he added.

“They were sort of releasing them, but it was happening much more slowly than what some companies thought was optimal,” National Economic Council Director Kevin Hassett said of China’s rare earth exports at the time.

But U.S. companies have said throughout the negotiations that rare earth export flows from China have been staggered at best. China dominates the supply of these essential minerals, leaving companies with few other options.

A full-fledged trade deal with China remains out of reach, even despite extensive negotiations.

Just as with rare earths, U.S. officials said in September that China had established a “framework for a TikTok deal.” However, in previous weeks, China had not confirmed that such a deal had been reached.

Many experts say China’s strategy is to keep talking while reaching few concrete deals.

“Beijing will be happy to continue U.S.-China negotiations, but it is unlikely to make concessions,” William Yang, senior Northeast Asia analyst for the Taiwan-based International Crisis Group, told NBC News recently.

U.S. officials plan to meet with their Chinese counterparts for further discussions in November, where rare earths will likely take center stage again.