US-China Trade Tensions Escalate Amid Rare Earth Metal Disputes and Market Turmoil
President Trump's tariff threat and China's rare earth export restrictions have escalated US-China trade tensions, causing major stock market fluctuations and raising concerns globally, including Sweden.
- • President Trump threatens 100% tariffs on Chinese goods starting November 1.
- • China plans to restrict rare earth metal exports crucial to US industries.
- • US markets tumbled, with the S&P 500 dropping 2.7% on tariff and trade concerns.
- • Trump cancels meeting with Xi Jinping ahead of APEC summit as tensions rise.
Key details
President Trump has threatened to impose a 100% tariff on Chinese goods starting November 1, inflaming an already volatile trade relationship between the US and China. This announcement triggered a sharp decline in the US stock market, with the S&P 500 dropping 2.7% — its largest single-day fall since April. Concurrently, China announced plans to restrict rare earth metal exports, a critical resource for US technology and automotive industries. These metals underpin key sectors, giving China a strategic advantage in this economic conflict.
The tariff truce established in May is due to expire on November 10, coinciding with the APEC summit in Seoul where Trump and Chinese President Xi Jinping were expected to meet. However, Trump announced the cancellation of this meeting, further dimming prospects for de-escalation.
Chinese stocks listed on US exchanges, including Alibaba and Baidu, plummeted nearly 6%, while rare earth metal-linked US stocks such as Ramaco Resources rose sharply by 5.7%. Senior SEB economist Robert Bergqvist characterized the dispute as a power struggle between two interdependent economic giants. He highlighted China's vulnerability due to its heavy reliance on US exports, despite its leverage from holding significant US treasury bonds.
Market analysts have expressed concerns over the ripple effects these tensions could have on global markets, including Sweden’s stock market, which is tightly connected with worldwide economic shifts. The escalating trade conflict threatens to reignite a harsh economic confrontation reminiscent of earlier tariff peaks, with tariffs previously reaching 145% from the US and 125% from China.