Stocks Decline Amid Donald Trump’s Warning of Tariffs on China

Market Reaction to Trump’s Tariff Threats

Stocks closed with sharp losses Friday after President Trump threatened to impose new massive tariffs on China in response to new export control rules from Beijing. In a Friday post on social media, Trump indicated his administration was considering various ways to respond to the country’s latest restrictions on rare metals exports, including an increase of Tariffs on Chinese products and restrictions on U.S. exports to China.

“I will be forced, as President of the United States of America, to financially counter their move. For every Element that they have been able to monopolize, we have two,” Trump wrote on Truth Social, expressing shock at the new export controls.

Wall Street Reaction

Trump’s warnings sent Wall Street into a tailspin just before the markets closed for a long weekend. The Dow Jones Industrial Average lost 876 points, closing down 1.9 percent. The S&P 500 index fell 2.7 percent, and the tech-heavy Nasdaq composite plunged 3.6 percent.

China's Control Over Rare Metals

China controls roughly 70 percent of the world’s rare metals and earths, vital for manufacturing semiconductor chips. Both nations have escalated measures to protect their semiconductor capabilities in the race for AI dominance. Under Beijing’s new regulations, Chinese firms must acquire case-by-case approval to export these critical materials.

Implications for U.S.-China Relations

This situation marks a significant setback for U.S.-China relations after months of negotiations. Trump had previously anticipated a meeting with Xi at the upcoming Asia-Pacific Economic Cooperation summit, but now he suggests there is “no reason to do so.”

With the geopolitical landscape shifting, how will these tariff talks impact global markets and economies?