China has issued a formal warning to the United States, cautioning against the escalation of tariff tensions and vowing retaliation if Washington proceeds with new trade barriers. The statement was released by China’s Ministry of Commerce, which emphasized that the U.S. should pursue a negotiated resolution to tensions rather than resort to further hostilities.
The warning followed U.S. President Donald Trump’s plan to impose a 100% tariff on Chinese imports, citing Beijing’s new restrictions on rare earth exports. These exports are crucial for products ranging from smartphones to fighter jets. In response, the Chinese Ministry of Commerce stated that China’s position on the trade war remains consistent: it does not want the conflict but is not afraid of it. The ministry also stressed that if the U.S. insists on taking the wrong approach, China will take resolute measures to protect its legitimate interests.
This renewed tension threatens to derail a potential meeting between Trump and Chinese President Xi Jinping, scheduled to take place at the APEC summit in South Korea in late October or early November. The meeting was expected to serve as an opportunity to restart dialogue between the two largest economies. However, Trump’s repeated use of import duties as a tool for pressure has clashed with China’s refusal to yield, as it relies on its economic leverage to counter U.S. pressure. The Commerce Ministry reiterated that willful threats of high tariffs are not the right way to engage with China and warned that retaliation is inevitable if the U.S. continues down this path.
Both countries have accused each other of breaching the trade ceasefire by introducing new restrictions. Trump has accused China of “becoming very hostile,” claiming Beijing is “holding the world captive” by limiting access to rare earths. Beijing’s new export rules now require foreign companies to obtain special approval before exporting goods containing even minimal amounts of Chinese-sourced rare earth elements.
In August, the U.S. and China agreed to prolong a tariff truce after a trade war in which both sides imposed ever-increasing duties. Under the 90-day extension, U.S. tariffs on Chinese imports were reduced from 145% to 30%, while China’s tariffs on American products dropped from 125% to 10%. The extension is set to expire in November. The ongoing trade tensions have significant financial implications, with potential impacts on global supply chains and market stability.
Analysts suggest that the current impasse could lead to further economic disruptions, affecting industries reliant on rare earth materials. The trade conflict has already had a noticeable effect on global markets, with fluctuations in trade volumes and investment patterns. As both nations continue their posturing, the financial consequences could escalate, potentially leading to broader economic volatility.
Despite the current confrontational stance, some experts believe there is still room for compromise. However, the recent escalation of trade rhetoric and the looming deadline for the tariff truce extension have made the prospects for a swift resolution dimmer. The situation continues to be monitored closely by international markets and economic policymakers, who are assessing the potential impact of ongoing trade tensions on global economic growth and stability.