China’s government has denounced President Donald Trump‘s latest threat to impose an additional 100% tariff on Chinese goods, calling it a “typical example of US double standards.” A spokesperson for the commerce ministry warned that China could introduce its own unspecified “countermeasures” if President Trump carries out his threat, adding that Beijing was “not afraid” of a possible trade war.
Escalation and Softened Rhetoric
The heightened tensions followed President Trump’s post on Friday where he accused Beijing of “becoming very hostile” and trying to hold the world “captive” by tightening its rules for rare earths exports. He also threatened to pull out of a planned meeting with Chinese President Xi Jinping later this month.
However, President Trump shifted his tone on Sunday, posting: “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!” The President did not elaborate on this conciliatory message.
President Trump’s initial threats on Friday rattled financial markets globally. The S&P 500 share index closed down 2.7%, its steepest fall since April. Asian markets continued the decline on Monday, with the Shenzhen Composite Index falling 0.74% and Hong Kong’s Hang Seng shedding 1.5%, renewing fears of a full-scale trade war.
Defending Export Controls
China’s response, issued through written answers to journalists’ questions by the commerce ministry spokesperson, echoed aggressive language used during previous trade conflicts. The spokesperson criticized U.S. export restrictions on chips and semiconductors as an abuse of the concept of “national security” and “discriminatory practices against China.” Conversely, China defended its own export controls on rare earths—minerals used in smartphones and solar panels, of which China processes about 90% of the world’s supply—as “normal actions” necessary to safeguard national security.
The ministry warned: “Resorting to tariff threats is not the right way to engage with China,” and firmly stated, “China’s position on a tariff war has always been consistent: we do not want one, but we are not afraid of one.” The recent comments from both Washington and Beijing are widely interpreted as strategic positioning ahead of future trade talks, though it remains unclear whether the expected meeting between President Trump and President Xi in South Korea later this month will actually proceed.
Author’s Opinion
The Federal Reserve’s decision to cut interest rates on the belief that President Trump’s aggressive, escalating tariffs will only cause a “transitory” inflationary bump is a dangerously optimistic move that ignores the economic reality of a global trade war. Tariffs, unlike temporary supply shocks, are a sustained policy choice that structurally increase import costs, pushing inflation higher through price-sensitive goods like groceries and holiday items. By prioritizing the employment outlook over maintaining its inflation credibility, the Fed risks losing the public’s confidence, which would make the inevitable fight against longer-term, tariff-fueled inflation exponentially more costly and difficult.
Featured image credit: Venti Views via Unsplash
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