It was a swift and dramatic response by Trump, a Republican who has wielded tariffs paid by US importers against friends and foes. It could escalate a trade war that Washington and Beijing paused earlier this year after painstaking diplomacy.
Experts said restrictions on US software shipments to China could be a massive blow to the country’s tech industry, including cloud computing and artificial intelligence.
Trump also threatened new export controls on airplanes and airplane parts, and a person familiar with the matter said the administration was sketching out other possible targets.
Beijing has long called for Washington to abandon unilateral trade restrictions it says undermine global commerce.
MARKETS DIVE ON NEW THREATS
Trump’s trade threats – delivered in a series of social media posts and a public back-and-forth with reporters – sent markets and relations between the world’s largest economies into a spiral.
China produces over 90 per cent of the world’s processed rare earths and rare earth magnets. Many are vital materials in products ranging from electric vehicles to aircraft engines and military radars.
Trump’s unexpected broadside shook global financial markets, sending the benchmark S&P 500 Index sliding by more than 2 per cent, its biggest one-day drop since April when a steady barrage of tariff announcements by Trump stoked market volatility.
Investors fled into the safe haven of gold and US Treasury securities, and the US dollar weakened against a basket of foreign currencies. Tech stocks piled on losses in after-market trading after Trump detailed the tariff and export control measures.
“Trump’s post could mark the beginning of the end of the tariff truce,” said Craig Singleton, a China expert at the Foundation for Defense of Democracies.
Singleton said Washington viewed China’s export control steps as a betrayal. “Beijing appears to have overplayed its hand.”
In his first social media post on Friday, 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. The reference to letters was an apparent reference to Beijing’s policy papers.
Trump said he had been contacted by unnamed countries incensed over Beijing’s steps and said he was surprised because of the “very good” recent relationship with China.
