Beijing has issued a stern warning to the US, vowing to retaliate if Donald Trump proceeds with his threat to impose 100% tariffs on Chinese imports. This has sent shockwaves through global markets, raising fears of a renewed trade war.
China’s commerce ministry accused Washington of escalating trade tensions after Trump announced on Friday his plan to implement the massive tariffs and new software controls by November 1.
“Wilful threats of high tariffs are not the right way to get along with China,” a ministry spokesperson said. “We do not want [a trade war], 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 conflict intensified after China said it would restrict exports of crucial rare-earth materials, which are essential for US industries. Trump labeled China’s move as “very hostile.”
However, on Sunday, both Trump and senior officials hinted at a possible resolution. On Truth Social, Trump wrote, “Don’t worry about China, it will all be fine!… The U.S.A. wants to help China, not hurt it!!!” Similarly, official JD Vance called on Beijing to “choose the path of reason.”
The threat of a trade war has already impacted financial markets. On Friday, the Dow Jones index plunged 879 points, or 1.9%, wiping out an estimated $2 trillion in US stock value. Dow futures indicated another sharp drop of 887 points for Monday’s open. The UK’s FTSE 100 also saw a nearly 1% decline.
China defended its new export controls on rare-earths, stating they are “not export bans.” The commerce ministry assured that “all applications of compliant export for civil use can get approval,” aiming to ease business concerns.
Market analyst Michael Brown from Pepperstone described the situation as “a rather unwelcome development.” He noted that investors are questioning whether Trump’s threat is credible or part of his “escalate to de-escalate” strategy—a tactic of making extreme threats to force concessions and speed up negotiations.