Trump ratchets up US-China trade war with new levies, export controls

By Trevor Hunnicutt WASHINGTON (Reuters) -U.S. President Donald Trump on Friday said he was raising tariffs on Chinese exports to the U.S. to 100% and imposing export controls on "any and all critical software" in a reprisal to recently announced export limits by China on rare earth minerals critical to tech and other manufacturing. "Based on the fact that China has taken this unprecedented position, and speaking only for the U.S.A., and not other Nations who were similarly threatened, starting November 1st, 2025 (or sooner, depending on any further actions or changes taken by China), the United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying," Trump posted on his Truth Social platform. "Also on November 1st, we will impose Export Controls on any and all critical software." An earlier post from Trump on Friday signaled new levies against Chinese goods were in the offing, and threatened to cancel a meeting with President Xi Jinping. That broadside against Beijing sent markets and relations between the world's largest economies into a spiral. Trump, due to meet Xi in about three weeks in South Korea, complained on social media about what he characterized as China's plans to hold the global economy hostage. On Thursday, China dramatically expanded its rare earth element export controls. China dominates the market for such elements, which are essential to tech manufacturing. Trump said there was no reason to hold the previously announced meeting with Xi, which Beijing had never confirmed. The actions signaled the biggest rupture in relations in four months between Beijing and Washington – the world's biggest factory and its biggest consumer. Many questioned whether an uneasy economic detente reached over the summer can survive. It was a swift and dramatic response by Trump, a Republican who has wielded tariffs paid by U.S. importers against friends and foes. It could escalate a trade war that Washington and Beijing paused earlier this year after painstaking diplomacy. Beijing has long called for Washington to abandon unilateral trade restrictions it says undermine global commerce. MARKETS TUMBLE ON TARIFF THREATS China produces over 90% of the world's processed rare earths and rare earth magnets. Many are vital materials in products ranging from electric vehicles to aircraft engines and military radars. Trump's unexpected broadside shook global financial markets, sending the benchmark S&P 500 Index sliding by more than 2%, its biggest one-day drop since April when a steady barrage of tariff announcements by Trump stoked market volatility. Investors fled into the safe haven of gold and U.S. Treasury securities, and the U.S. dollar weakened against a basket of foreign currencies. "Trump's post could mark the beginning of the end of the tariff truce," said Craig Singleton, a China expert at the Foundation for Defense of Democracies. Singleton said Washington viewed China's export control steps as a betrayal. "Beijing appears to have overplayed its hand." In his first social media post on Friday, Trump said China has been sending letters to countries worldwide saying it planned to impose export controls on every element of production related to rare earths. He said he had been contacted by unnamed countries incensed over Beijing's steps and said he was surprised because of the "very good" recent relationship with China. TRUMP CONDEMNS BEIJING'S 'HOSTILE ORDER' Terming China's actions a "hostile order," Trump said he had been forced "to financially counter their move" "For every Element that they have been able to monopolize, we have two," Trump said. His follow-up post announcing the levies made no mention of whether he would meet Xi in coming weeks. But earlier on Friday Trump had said: "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." Previously, Trump had said he would meet Xi on the sidelines of the Asia-Pacific Economic Cooperation forum being held in Gyeongju, South Korea, starting October 31. The White House and the Chinese embassy in Washington did not immediately respond to a request for comment. A spokesperson for the U.S. Trade Representative declined comment on what countermeasures Trump was contemplating while a spokesperson for the U.S. Treasury did not immediately respond to a request for comment. The two offices have led talks with Beijing on trade. Economic tensions had been rising in recent days. On Thursday, the Trump administration proposed banning Chinese airlines from flying over Russia on routes to and from the U.S. On Friday, the U.S. Federal Communications Commission said on major U.S. online retail websites have removed millions of listings for prohibited Chinese electronics. China's move on Thursday included adding five new elements as well as dozens of pieces of refining technology to its export-restricting control list. It also required foreign rare earth producers that use Chinese materials to comply with its rules. "Beijing must have concluded that the U.S. was not prepared to make significant concessions on tariffs, export controls or Taiwan," said Scott Kennedy, a China business and economics expert at Washington's Center for Strategic and International Studies think tank. China calculated, he said, that if Trump retaliates, "China will be in a better position to weather the storm, and that the U.S. will be the first to back down." (Reporting by Trevor Hunnicutt; additional reporting by David Brunnstrom, David Lawder and Maiya Keidan; Editing by Caitlin Webber, Deepa Babington and David Gregorio)

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