The clock ticks on another trade war escalation.
The Ball’s in Your Court
Bloomberg reports Trump, Xi Spark Another Standoff With World Economy at Risk
US President Donald Trump and Chinese leader Xi Jinping’s latest tit-for-tat showdown has both countries claiming the ball is now in the other’s court, with the clock ticking toward another escalation in import tariffs.
After Trump signaled openness to doing a deal with Beijing, US Vice President JD Vance on Sunday declared the outcome would “depend on how the Chinese respond.” Hours later, China’s Foreign Ministry made clear Beijing would take its cues from Washington’s next steps, after having already unleashed what it saw as retaliatory actions.
“If the US continues on its wrong course, China will firmly take necessary measures to safeguard its legitimate rights and interests,” Foreign Ministry spokesman Lin Jian said at a regular briefing in Beijing. Chinese authorities haven’t yet retaliated to Trump’s threat to impose 100% tariffs over their latest rare-earth curbs, while saying there could be “exemptions” in order to facilitate trade.
“This is China versus the world,” Bessent said. “They have pointed a bazooka at the supply chains and the industrial base of the entire free world. And you know, we’re not going to have it.”
The question now is which side blinks first.
Trump-Xi Meeting Scheduled Despite Trade Tensions
The Wall Street Journal reports Trump-Xi Meeting Scheduled Despite Trade Tensions
An expected meeting between President Trump and Chinese leader Xi Jinping is still on the schedule, a top U.S. trade official said on Tuesday. It was the strongest indication yet that the two sides are trying to deescalate their latest trade dispute, after Trump’s threat to impose additional 100% tariffs on China last week.
“There is a plan, there is a scheduled time for that,” U.S. Trade Representative Jamieson Greer said on CNBC of a Trump-Xi meeting, without providing further details. Trump threatened to call off that meeting, expected later this month, and issued a tariff threat on Friday in response to China’s latest round of export restrictions on rare earth materials.
China Blames Trump
CNN reports China says it didn’t reignite trade tensions with the US, Trump did
President Donald Trump expressed shock at China’s “surprising” move to unleash sweeping export controls on rare earths, accusing the country of “becoming very hostile.”
But according to Beijing, it was Washington’s expansion of curbs on Chinese firms that ratcheted up tensions and drove it to further tighten its grip on the critical minerals essential in the production of a wide range of electronics, automobiles and semiconductors.
For Beijing, much of the current escalation could have been avoided had the Trump administration not piled on more restrictions in late September, massively increasing the number of Chinese entities on its export control list, Chinese experts and analysts said.
Jin Canrong, a professor of international relations at Renmin University in Beijing and a government adviser, said Beijing had merely responded to Washington’s series of “petty manoeuvres.”
“From China’s perspective, this is extremely malicious,” Wu said, adding that it again shows Trump “acting in bad faith.”
“If, after more than half a year of dealing with China, the US still hasn’t realized that taking such actions against China will have serious consequences, then I’d say the people on Trump’s team are downright incompetent,” he said.
Deliberately Causing Panic
CNBC reports China accuses U.S. of deliberately causing panic over rare earth controls, says it is open to talks
- China’s Ministry of Commerce accused the U.S. of creating “panic” over Beijing’s controls on rare earth exports.
- Ministry of Commerce spokesperson He Yongqian said China was open to trade talks with the U.S.
- U.S. Trade Representative Jamieson Greer accused China of trying to control the world’s technology supply chains in an interview with CNBC.
China on Thursday accused the U.S. of creating “panic” over Beijing’s controls on rare earth minerals, but indicated it is open to trade talks to resolve a dispute that has threatened to reignite a trade war between the world’s two largest economies.
“The US interpretation seriously distorts and exaggerates China’s measures, deliberately creating unnecessary misunderstanding and panic,” Ministry of Commerce spokesperson He Yongqian told a news conference, according to the state newspaper Global Times.
Beijing last week announced sweeping controls on rare earth exports ahead of an expected meeting between President Donald Trump and President Xi Jinping in South Korea. Trump has threatened to impose 100% tariffs on China starting Nov. 1 or sooner in retaliation.
Trump Confirms US-China Trade War
Finally, Yahoo!Finance reports Trump Confirms US-China Trade War
President Trump on Wednesday confirmed that trade tensions with China remain high, telling a reporter who asked whether the two countries are headed for a prolonged trade war, “Well, you’re in one now.”
The president’s comments came despite Treasury Secretary Scott Bessent suggesting that an extension of the tariff pause between the US and China was possible — and that Trump still plans to meet with Chinese President Xi Jinping later this month.
Over the past week, relations between the two countries have become increasingly strained, though both sides have sent mixed signals about just how serious the fallout could be.
Last Friday, Trump said the US would impose an additional 100% tariff on Chinese goods starting on Nov. 1 over Beijing’s plan to impose new export controls on rare earth minerals.
At the start of this week, Wall Street breathed a sigh of relief when Trump hinted at a possible deescalation.
“Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment,” he wrote on Truth Social.
Since then, however, China sanctioned US units of a South Korean shipping company, while Trump threatened to further curtail trade with the country in response to its halt of US soybean purchases.
US tariffs on China of nearly 145% in some cases are on hold until Nov. 10 while the two countries negotiate a larger trade deal. Chinese tariffs on US goods ballooned to 125% before the pause.
What to Expect at the Xi Trump Meeting
I suspect fluff announcements over soybeans or other meaningless chatter that both sides may praise.
There is no reason for China to offer much. Trump has midterm election concerns, farmer concerns, and he should have recession concerns.
If there is anything, Trump will brag about it.
But unless Trump makes serious concessions, China won’t either.
Regardless, no matter what comes out of this meeting, Trump is prone to trade temper tantrums to which China will respond in kind.
Look for an unstable truce.
But Trump is backing down on some threats already as economic damage sets in.
For discussion, please see Trump Tiptoes Away from Reciprocal Tariffs with Many New Exemptions
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