Its retaliation brings the world to the brink of a fully fledged trade war, as massive economies — including the EU — weigh tough responses to the White House announcement.
The news sent fresh shockwaves through global financial markets, which had hardly recovered from an initial slump on Wednesday and Thursday. Crude oil prices, a rough proxy for global economic activity, slumped over 7 percent to their lowest level in over three years, while futures on the benchmark S&P 500 index lurched another 2.5 percent lower to their lowest in nine months.
Along with the retaliatory tariffs, China also raised the bar for exports to the U.S. of critical raw materials, such as samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium.
These metals are used in magnets, nuclear technology, cancer research, oil drilling and other high-tech sectors. In recent trade disputes with the U.S. and EU, China has already restricted trade in more common materials such as graphite, gallium and germanium.
“This practice of the U.S. is not in line with international trade rules, seriously undermines China’s legitimate rights and interests, and is a typical unilateral bullying practice, ” the Chinese Finance Ministry said in a statement.
Small window for de-escalation
However, Beijing balanced that with a suggestion that it’s open to negotiate a walk-back from what is becoming a intensifying U.S.-China trade war.