Beijing has told the US it will retaliate if Donald Trump fails to back down on his threat to impose 100% tariffs on Chinese imports as investors brace for another bout of trade war turmoil.
China’s commerce ministry blamed Washington for raising trade tensions between the two countries after Trump announced on Friday that he would impose the additional tariffs on China’s exports to the US, along with new controls on critical software, by 1 November.
“Wilful threats of high tariffs are not the right way to get along with China,” a spokesperson for the commerce ministry said on Sunday, according to the state news agency Xinhua. “China’s position on the trade war is consistent. We do not want it, but we are not afraid of it.
“If the United States insists on going the wrong way, China will surely take resolute measures to protect its legitimate rights and interests.”
The US president shocked the financial markets on Friday when he accused China of “very hostile” moves to restrict exports of rare-earth materials needed by US industry.
It prompted heavy falls on Wall Street, where about $2tn (£1.5tn) was wiped off the value of the US stocks.
China insisted on Sunday that its latest export controls on rare earths such as holmium, erbium, thulium, europium and ytterbium were legitimate.
“China’s export controls are not export bans,” said the commerce ministry spokesperson. “All applications of compliant export for civil use can get approval, so that relevant businesses have no need to worry.”
The measures were introduced after Washington added a number of Chinese firms to its export control list in a crackdown on the use of foreign affiliates to circumvent export curbs on chipmaking equipment and other goods and technology.
The UK’s FTSE 100 share index fell almost 1% on Friday as Trump’s threat sparked a late selloff. The futures market indicates there could be further losses in London and New York on Monday, although there could also be relief that Beijing has not yet retaliated.
Bitcoin, which had tumbled 8% after Trump’s post on Truth Social, rose by 1.5% on Sunday after China refrained from retaliating.
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Trump’s tariff threat was “a rather unwelcome development for financial markets” as investors had “by and large moved on from the trade and tariff story”, said Michael Brown, a senior research strategist at the brokerage firm Pepperstone.
“Chiefly, the question that every man and his dog are attempting to answer is whether this is a credible threat, that the Trump admin might follow through on, or whether this is another example of the ‘escalate to de-escalate’ strategy that Trump used so frequently earlier in the year.
“A strategy where outlandish and ridiculous tariff figures are threatened, in an attempt to focus minds, extract concessions from the other party, and ultimately come to agreement faster than otherwise might’ve been possible.”
