Former U.S. President Donald Trump has announced plans to impose an additional 100% tariff on Chinese imports starting next month. He also stated that the U.S. would implement new export controls on key software technologies.

Trump made the declaration via social media, escalating tensions just days after China introduced tighter regulations on the export of rare earth materials—critical components in electronics, vehicles, and military equipment. In response to Beijing’s move, Trump accused China of becoming increasingly hostile and attempting to hold the global economy “captive.”

The situation took another turn when Trump threatened to cancel a scheduled meeting with Chinese President Xi Jinping. While he later clarified that the meeting had not been officially canceled, he expressed uncertainty about whether it would go ahead, though he added, “I’m going to be there regardless,” speaking from the White House.

Trump’s comments triggered a negative reaction from financial markets, with the S&P 500 index falling 2.7%, marking its steepest one-day drop since April.

China plays a dominant role in the global production of rare earth elements, which are vital for manufacturing a wide range of products, including smartphones and electric vehicles. The last time China restricted rare earth exports—following a previous round of U.S. tariff increases—American companies heavily reliant on these materials, such as Ford, were forced to temporarily halt production.

Besides the export rule changes, China has opened a monopoly investigation into U.S.-based tech company Qualcomm, potentially jeopardizing its planned acquisition of another chipmaker. Although Qualcomm is headquartered in the U.S., it generates a large portion of its revenue in China. Additionally, Beijing has introduced new port fees that apply to ships owned or operated by American firms.

In a follow-up social media post, Trump remarked, “Some very strange things are happening in China! They are becoming very hostile.”

The U.S. and China have been engaged in a delicate trade truce since May, when both sides agreed to suspend the high tariffs that had drastically reduced bilateral trade. Even so, American products still face a 10% tariff in China, while Chinese goods continue to face a 30% levy in the U.S.

Since then, trade representatives from both countries have held discussions on several contentious issues, including TikTok, agricultural imports, rare earth exports, and semiconductor technology. Another round of talks had been scheduled to take place later this month at a summit in South Korea.

Jonathan Czin, a China expert from the Brookings Institution, said that Xi Jinping’s recent moves are part of a broader strategy to gain leverage in the upcoming negotiations. He noted that while China’s new export restrictions have been announced, they are not yet in effect, indicating a calculated effort to influence future talks.

“He’s looking for ways to seize the initiative,” Czin explained, adding that the Trump administration is now forced to react to China’s maneuvers as they arise. According to him, China likely perceives the U.S. as more vulnerable in the long run. “From their perspective, the Trump administration blinked in past confrontations,” he said.

In earlier trade negotiations, China has consistently pushed for the U.S. to ease restrictions on semiconductor exports and establish more predictable tariff rules to support its businesses. Xi has previously used China’s rare earth dominance as a bargaining chip.

However, the latest Chinese export measures are more targeted, aimed directly at foreign defense companies, which makes them particularly significant. Gracelin Baskaran, who leads the critical minerals security program at the Center for Strategic and International Studies, said this could force the U.S. to return to the negotiation table.

“Nothing moves America like a threat to our defense industry,” she noted. “With limited options and increasing geopolitical tensions, the U.S. will be under pressure to strengthen its defense supply chains.”

Although a Trump-Xi meeting now appears unlikely, Baskaran believes that diplomatic efforts are still possible, particularly because China’s export rules won’t come into effect until December.

“There’s still room for talks,” she said. “Negotiations are likely to happen soon — but who leads them and where they take place remains to be seen.”