China Defies Trump's 100% Tariff Threat: Escalating Trade Tensions and Rare Earth Dispute

Trump has increased import taxes on numerous US trading partners during his administration. (Representational)

Beijing:

China indicated on Sunday it would maintain its position against President Donald Trump's threatened 100% tariff, encouraging the US to settle differences through diplomatic negotiations rather than threats. Meanwhile, US Vice President JD Vance defended Trump's stance and appeared to caution China against responding aggressively.

"China's stance is consistent," stated the Commerce Ministry in an online announcement. "We do not want a tariff war but we are not afraid of one."

This marks China's first official response to Trump's threat to increase taxes on Chinese imports by November 1, following China's new restrictions on rare earth exports, which are essential for numerous consumer and military products.

The escalating tensions risk derailing a potential meeting between Trump and Chinese President Xi Jinping and ending a temporary pause in a trade conflict where tariffs from both nations briefly exceeded 100% in April.

In response, Vance emphasized on Sunday that Trump is determined to protect America's economic interests while increasing US self-sufficiency. He described China's extensive control over critical American supply chains as a national emergency, justifying Trump's decision to implement substantial tariffs.

"It's going to be delicate dance and a lot of it is going to depend on how the Chinese respond. If they respond in a highly aggressive manner, I guarantee you the president of the United States has far more cards than the People's Republic of China," Vance said on Fox News Channel's "Sunday Morning Futures."

"If, however, they're willing to be reasonable, then Donald Trump is always willing to be a reasonable negotiator. We're going to find out a lot in the weeks to come about whether China wants to start a trade war with us or whether they actually want to be reasonable," Vance continued. "I hope they choose the path of reason. The president of the United States is going to defend America regardless."

Since taking office in January, Trump has increased import taxes on many US trading partners, seeking concessions. China has been among the few countries refusing to yield, relying on its economic influence.

"Frequently resorting to the threat of high tariffs is not the correct way to get along with China," the Commerce Ministry stated in its post, presented as responses from an unnamed spokesperson to four questions from unspecified media outlets.

The statement advocated addressing concerns through dialogue.

"If the US side obstinately insists on its practice, China will be sure to resolutely take corresponding measures to safeguard its legitimate rights and interests," the post warned.

Beyond the 100% tariff, Trump also threatened to impose export controls on "critical software," without providing specific details.

Both nations accuse each other of violating the spirit of the trade truce by implementing new trade restrictions.

Trump claimed in a social media post that China is "becoming very hostile" and holding the world captive by limiting access to rare earth metals and magnets.

The Chinese Commerce Ministry mentioned that the US has introduced several new restrictions recently, including expanding the list of Chinese companies subject to US export controls.

Regarding rare earths, the ministry stated that export licenses would be granted for legitimate civilian applications, noting these minerals also have military uses.

The new regulations require foreign companies to obtain Chinese government approval to export items containing Chinese-sourced rare earths, regardless of where the products are manufactured.

China represents nearly 70% of global rare earths mining and controls approximately 90% of their worldwide processing. Access to these materials is a central issue in trade negotiations between Washington and Beijing.

These critical minerals are essential components in numerous products, from jet engines, radar systems, and electric vehicles to consumer electronics including laptops and phones. China's export controls have impacted European and other manufacturers, as well as American ones.

The Commerce Ministry statement noted that the US is also disregarding Chinese concerns by proceeding with new port fees on Chinese ships effective Tuesday. China announced on Friday it would impose reciprocal port fees on American vessels.