China threatens US with retaliation in response to Trump’s 100 percent tariff threat
China has issued a warning to the United States, stating that it will retaliate if President Donald Trump persists with his 100% tariff threat on Chinese imports. This escalation follows Trump’s announcement of new tariffs on Friday, which could take effect by November 1. The Chinese commerce ministry criticized Washington for heightening trade tensions and characterized Trump’s tariff threats as unhelpful.
China’s Response to Tariff Threats
A spokesperson for China’s commerce ministry emphasized that the nation does not desire a trade war, but is prepared to defend its interests. They stated, “If the United States insists on going the wrong way, China will surely take resolute measures to protect its legitimate rights and interests.”
Concerns were heightened among investors following Trump’s allegations that China was taking “hostile” actions by restricting the export of rare-earth materials essential for U.S. industries. The stock market reacted dramatically, with losses amounting to approximately $2 trillion in market value.
Implications for the Stock Market
- Wall Street faced significant declines, influencing global markets and causing the UK’s FTSE 100 share index to drop nearly 1%.
- Futures markets indicate potential further losses in both London and New York.
- Bitcoin, after initially dropping 8%, saw a slight increase of 1.5% once China chose not to retaliate immediately.
China’s Export Controls
The Chinese government has defended its new regulations on rare earths, categorizing them as appropriate export controls rather than outright bans. The commerce ministry spokesperson assured that compliant export applications for civil use would continue to receive approvals.
This situation arose after the U.S. placed several Chinese companies on its export control list, aimed at restricting access to necessary technology and goods.
Market Analysts’ Perspectives
Financial analysts highlighted Trump’s tariff threat as a negative development in markets, suggesting that investors had largely moved past trade and tariff concerns. Michael Brown, a senior research strategist at Pepperstone, remarked that the market is now questioning the credibility of Trump’s threats and whether this represents another instance of his strategy to escalate tensions to facilitate negotiations.
As the trade standoff continues, stakeholders worldwide are closely monitoring developments. Both sides have indicated they are prepared for a protracted conflict, raising concerns about the broader implications for global trade.
