President Donald Trump has threatened to pull out of an expected meeting with President Xi Jinping of China after Beijing tightened its rules for exports of rare earths.
In a post on social media, Trump said he now saw “no reason” to meet with President Xi later this month, accusing China of “becoming very hostile” and trying to hold the world “captive”.
He also threatened a “massive” increase in tariffs on Chinese goods, raising fears about a renewal of trade tensions between the two economic giants.
Financial markets dropped in the wake of the remarks, with the S&P 500 down roughly 1.4% in late morning trade in New York.
As well as tightening rules for exports of rare earths, China has opened a monopoly investigation into the US tech firm Qualcomm that could stall its acquisition of another chipmaker.
Although Qualcomm is based in the US, a significant portion of its business is concentrated in China.
Beijing has also said it will charge new port fees to ships with ties to the US, including those owned or operated by US firms.
“Some very strange things are happening in China!” Trump wrote in a post on social media on Friday. “They are becoming very hostile.”
The US and China have been in a fragile trade détente since May, when the two sides agreed to drop triple-digit tariffs on each others’ goods that had nearly stopped trade between the two countries.
Officials have held a series of talks since then on matters including TikTok, agricultural purchases, and the trade of advanced technology technology and rare earths supplied by China, which are key components in cars, smartphones and many other items.
China expert Jonathan Czin, a fellow at the Brookings Institution, said Xi’s recent actions were a bid to shape upcoming talks with the US, noting that the recent rare earths directive does not go into effect immediately.
“He’s looking for ways to seize the initiative ,” he said. “The Trump administration is having to play a game of whack-a-mole and deal with these issues as they come up.”
He added that he did not think China was worried about US retaliation in response.
“What China took away from the Liberation Day tariffs and the cycle of escalation followed by de-escalation is that the Chinese side had a higher pain threshold,” he said. “From their perspective the Trump administration blinked.”
