Stocks fall as Donald Trump warns of new Chinese tariffs
Stocks closed with sharp losses on Friday after President Trump threatened to impose “massive” new tariffs on China in response to new export control rules from Beijing.
In a Friday social media post, Trump said his administration was considering various ways to respond to the country’s recent restrictions on rare earth exports, including a “massive increase in tariffs on Chinese products” and restrictions on US exports to China.
“I, as President of the United States of America, will have to confront their move financially. For every element they have monopolized, we have two.” Trump wrote on Truth Social, expressing his shock and dismay at the new export controls.
“I never thought it would come to this, but perhaps, as with all things, the time has come,” he wrote.
Trump’s message and the prospect of higher tariffs rocked Wall Street on Friday afternoon, hours before markets closed for the weekend for three days before the federal holiday on Monday.
The Dow Jones Industrial Average lost 876 points during the day, closing with a loss of 1.9 percent. The S&P 500 fell 2.7 percent, and the Nasdaq Composite, which is dominated by technology stocks, fell 3.6 percent before the closing bell.
China controls nearly 70% of the world’s rare earths and metals, which are essential materials for manufacturing semiconductor chips. Both the United States and China have taken escalating measures to protect their semiconductor production capabilities and prevent aid to each other, as each seeks to dominate the artificial intelligence race.
Under new regulations from Beijing, Chinese companies must obtain “case-by-case approval” to export rare earth elements and other semiconductor materials. The new rules also apply to technology used to process rare metals into semiconductor components.
Friday marked a major step back for the United States and China after months of negotiations in the wake of Trump’s imposition of tariffs on Chinese goods. Trump and Xi are expected to meet at the Asia-Pacific Economic Cooperation summit this month, hoping to reach a final trade deal.
But Trump said on Friday that “there appears to be no reason to do that” and suggested that Xi had sought to obscure news of the emerging ceasefire between Israel and Hamas.
“The Chinese messages were particularly inappropriate because this is the day peace came to the Middle East after three thousand years of pandemonium and battles. I wonder if this timing is coincidental?” Trump wrote.
