US President Donald Trump threatened to hike tariffs against China and cancel a planned meeting with President Xi Jinping, in a broadside against Beijing that sent markets and relations between the world's largest economies into a spiral on Friday.
Trump, due to meet Xi in about three weeks in South Korea, complained on social media about what he called China's plans to hold the global economy hostage after China dramatically expanded its rare earths export controls on Thursday.
He said there was no reason to hold the meeting with Xi that he had previously announced. Beijing had never publicly confirmed the meeting between the leaders.
Trump also threatened a "massive" increase in tariffs on US imports from China. The step could revive a destabilizing tit-for-tat trade war that Washington and Beijing paused amid painstaking diplomacy earlier this year.
Trump's unexpected broadside had an immediate impact on US stock prices, with the benchmark S&P 500 Index sliding by 2% after his social media post. The remarks sent investors into the safe haven of US Treasury securities, sending yields on those assets lower, as well as into gold. The US dollar weakened against a basket of foreign currencies.
In his post, 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.
"Dependent on what China says about the hostile 'order' that they have just put out, I will be forced, as President of the United States of America, to financially counter their move," Trump said on Truth Social. "For every Element that they have been able to monopolize, we have two."
He added: "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."
The White House and the Chinese embassy in Washington did not immediately respond to a request for comment.
A spokesperson for the US trade representative declined comment while a spokesperson for the US Treasury did not immediately respond to a request for comment. The two offices have led talks with Beijing on trade.
China's move on Thursday included adding five new elements and extra scrutiny for semiconductor users and adding dozens of pieces of refining technology to its export-restricting control list. It also required foreign rare earth producers who use Chinese materials to comply with its rules.
China produces over 90% of the world's processed rare earths and rare earth magnets. The 17 rare earths are vital materials in products ranging from electric vehicles to aircraft engines and military radars.
