President Donald Trump on Friday expressed frustration over what he called China’s “trade hostility,” threatening to respond with large tariffs on China and cancel his upcoming meeting with Chinese President Xi Jinping.
The comments sparked a sell-off in shares. The Dow Jones Industrial Average fell 385 points, or 0.8%. While the S&The P 500 fell 1.25% and the tech-heavy Nasdaq fell 1.75%.
Trump’s comments came a day after China imposed new restrictions on rare earth minerals, key materials in the production of semiconductors used for everything from artificial intelligence to household appliances.
In a social media post, Trump said China had sent letters to countries around the world threatening to impose export controls on “any and all elements of production that have to do with rare earths.”
President Donald Trump, left, shakes hands with Chinese President Xi Jinping during a meeting on the sidelines of the G-20 summit in Osaka, western Japan, June 29, 2019.
Susan Walsh/AP, Archives
“There is no way China will be allowed to hold the world ‘captive,’ but that seems to have been their plan for quite some time,” Trump said.
In retaliation, Trump threatened a “massive increase” in tariffs on Chinese goods entering the United States, although he said the move would be “potentially painful.”
Tariffs on Chinese imports to the United States currently stand at 30%, down from a peak of 145% earlier this year.
Trump also threatened to cancel an upcoming meeting with Jinping.
“This was a real surprise, not only to me, but to all the leaders of the free world. I was supposed to meet with President Xi in two weeks, at APEC, in South Korea, but now it seems there is no reason to do so,” Trump concludes.
This comes as the US-China trade truce is still in effect, but will expire in less than a month.
