Tariff Latest: Rare Earth Minerals, Critical Software Controls, Chinese Export Data

Chinese exports to the U.S. in September fell by 27% from a year earlier. (Photo by Justin Sullivan/Getty Images)

Key Points

• President Donald Trump threatened 100% additional tariffs and export controls on China, but suggested room for negotiation.
• An ING economist believes both the U.S. and China want to avoid escalating trade tensions, favoring a continued trade truce.
• China’s exports increased by 8.3% in September, exceeding forecasts, while exports to the U.S. fell by 27%.

Tariff fears are back on the agenda after President Donald Trump threatened new levies on Chinese imports last week. However, his latest statements suggest it could just be a negotiating tactic ahead of a potential meeting with China’s leader Xi Jinping.

Trump said Friday he would hit China with a 100% additional tariff and impose new export controls on critical software products after Beijing placed sweeping restrictions on the export of rare-earth minerals.

Trump reiterated the plan in comments to reporters on Sunday but also said there was an “eternity” until the Nov. 1 deadline for the tariff imposition. He also suggested there was room for negotiation in a social-media post on the same day.

“Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment,” Trump said Sunday on his Truth Social platform, adding “The U.S.A. wants to help China, not hurt it!!!”

That could spur hopes that a potential meeting between Trump and Xi at a summit in South Korea at the end of the month will lead to a trade agreement.

“Given the disruption seen during the peak of the trade war in April and May, and the language from policymakers in both countries, we believe that neither China nor the U.S. wishes to return to mutually-damaging tit-for-tat escalations and retaliations. As such, finding common ground to continue the trade truce remains our base case scenario,” wrote ING economist Lynn Song in a research note.

China has defended its restrictions on rare earth exports and accused the U.S. of a “double standard” in trade measures, according to remarks by a Chinese Ministry of Commerce spokesperson on Sunday.

Meanwhile, China’s exports rose at the fastest pace in six months in September, beating market expectations. Outbound shipments rose 8.3% from a year earlier, accelerating from August’s 4.4% increase and exceeding the 6.0% growth forecast by economists in a Wall Street Journal poll, according to data released Monday by the General Administration of Customs.

China’s exports to the U.S. fell 27% from the same month a year earlier, extending a slide that began in April when the Trump administration’s “Liberation Day” tariffs on Chinese goods took effect.

Write to Adam Clark at adam.clark@barrons.com