Trump threatens technical export restrictions, new 100% tariff on Chinese imports: NPR

WASHINGTON — President Donald Trump threatened Friday to impose an additional 100% tax on Chinese imports starting Nov. 1 or sooner, potentially escalating tariffs close to levels that fueled fears of a global recession in April.

The president expressed frustration over new export controls China has placed on rare earths – saying on social media that “there appears to be no reason” to meet with Chinese leader Xi Jinping as part of an upcoming trip to South Korea.

Trump later told reporters that he had not canceled his rally. “But I don’t know if we’re going to get it,” he said during an Oval Office appearance on a different topic. “I’ll be there anyway, so I guess we might have it.”

Trump also suggested there might be time to tone down his sharp new tariff threat. “We’ll have to see what happens. That’s why I made it on November 1,” he said.

China’s new restrictions

On Thursday, the Chinese government restricted access to rare earth minerals, requiring foreign companies to get special approval to ship the metallic elements abroad. It also announced licensing requirements for the export of technologies used in mining, smelting and recycling of rare earths, adding that all export requests for products used in military goods would be rejected.

On social media, Trump described the export controls as “shocking” and “out of nowhere.” He said China is “becoming very hostile” and is “holding the world captive” by restricting access to the metals and magnets used in electronics, computer chips, lasers, jet engines and other technologies.

Trump said in a post that “the United States of America will impose a 100% tariff on China beginning November 1, 2025 (or sooner, depending on any further actions or changes by China), on top of any tariff they currently pay.” The president also said the US government would respond to China by imposing its own export controls “on all critical software” from US companies.

The Chinese embassy in Washington did not immediately respond to an Associated Press request for comment.

Trump is known for using threats as a tactic

The S&P 500 fell 2.7% on concerns about rising tensions between the world’s largest economies. It was the worst day for the market since April, when the president last spoke out about such high import duties. Yet the stock market closed before the president made the terms of his threat clear.

Not only could the global trade war instigated by Trump be reignited, but import taxes imposed on top of the 30% already levied on Chinese goods could, according to previous administration statements, destroy US-China trade in a way that could slump global growth.

While Trump’s wording was definitive, he is also known for backing away from threats. Earlier this year, some investors began engaging in what the Financial Times called the “TACO” trade, which stands for “Trump Always Chickens Out.”

The prospect of such high rates could exacerbate the president’s own political concerns, potentially pushing inflation higher at a time when the labor market appears fragile and the effects of a government shutdown are beginning to worsen with layoffs of federal workers.

The United States and China are vying for advantage in trade negotiations after import taxes announced earlier this year sparked the trade war. Both countries agreed to lower tariffs after negotiations in Switzerland and the United Kingdom, but tensions remain as China continues to restrict America’s access to the hard-to-extract rare earth metals needed for a wide range of American technologies.

There is already a backlog of export permit applications from the previous round of rare earth export controls in Beijing, and the latest announcements “add further complexity to the global rare earth supply chain,” the European Union Chamber of Commerce in China said in a statement.

There are other sticking points in the trade relationship, including U.S. restrictions on China’s ability to import advanced computer chips, sales of American-grown soybeans and a series of tit-for-tat port fees that both countries will impose starting Tuesday.

Analysts say there is time to de-escalate

Trump did not formally cancel the meeting with Xi, but even indicated it might not happen as part of a month-end trip to Asia. The trip would include a stop in Malaysia, where the Association of Southeast Asian Nations summit is taking place; a stop in Japan; and a visit to South Korea, where he was due to meet Xi ahead of the Asia-Pacific Economic Cooperation summit.

Sun Yun, director of the Stimson Center’s China program, said Beijing’s move was in response to U.S. sanctions on Chinese companies this week and upcoming port fees on China-related ships — but said there is room for de-escalation to keep the leaders meeting alive. “It’s a disproportionate response,” Sun said. “Beijing believes that de-escalation will also have to be mutual. There is room for maneuver, especially in implementation.”

Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies in Washington, DC, said China has influence because it dominates the market for rare earths, with 70% of mining and 93% of production of permanent magnets made from them, which are crucial for high-tech products and the military.

“These restrictions undermine our ability to develop our industrial base at a time of need. And second, they are a powerful negotiating tool,” she said.

Craig Singleton, senior director of the China program at the Foundation for Defense of Democracies think tank, said Trump’s post “could mark the beginning of the end of the tariff truce” that had cut both countries’ tax rates.

“Mutually assured disruption between the two parties is no longer a metaphor,” Singleton said. “Both sides are reaching for their economic weapons at the same time, and neither seems willing to back down.”