What Happened?
U.S. President Donald Trump said that China has sent letters to several countries proposing new export controls on rare earths and other critical materials. He described this move as “hostile” and “sinister,” warning that it could disrupt global supply chains and affect key industries worldwide.
Trump’s Response
Trump said the U.S. might be forced to financially counter China’s move. Among the options being discussed are a massive increase in tariffs on Chinese goods and other economic countermeasures. He emphasized that the United States holds stronger monopoly positions in many key elements and materials than China.
“There is no way China should be allowed to hold the world captive,” Trump said on Truth Social. He added that the U.S. has avoided using its advantages — “until now.”
Why It Matters
Rare earth elements are crucial for making electronics, electric vehicles, defense equipment, and renewable energy technologies. China controls a large share of the global supply, and any export restrictions could raise prices and create supply bottlenecks.
Trump’s warning signals a possible escalation in the U.S.–China trade war. If the U.S. imposes new tariffs, it could affect hundreds of billions in bilateral trade and global market stability.
Market Reaction
- The NASDAQ 100 index fell 1.8% after Trump’s comments.
- The offshore yuan also lost early gains as investors reacted to tariff concerns.
- Traders are now watching for official U.S. tariff announcements and China’s next move.
Trump accused China of making a “sinister” move by proposing export controls on rare earths, saying it threatens global markets. He warned of major U.S. retaliation, including steep tariffs on Chinese imports and other financial countermeasures.
APEC Summit Meeting Cancelled
Trump confirmed he will not meet Chinese President Xi Jinping at the upcoming APEC summit in South Korea. He called China’s timing “inappropriate,” noting that it coincided with the announcement of a new peace agreement in the Middle East.
US Cracks Down on Chinese Electronics, Impacting Stocks
US e-commerce sites are removing millions of banned Chinese electronic products from companies such as Huawei, according to the Federal Communications Commission Chair. This move has caused US-listed Chinese stocks to drop 5–10%.
Summary
China’s proposal to tighten rare earth exports has reignited tensions with the U.S. President Trump’s statements indicate a sharp policy shift and potential retaliation through tariffs and other economic measures. Markets have already started reacting to this development, marking another chapter in the ongoing U.S.–China trade confrontation.
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