Trump Softens 100% Tariff Threat for China; Beijing Defends Export Controls

That same day, Oct. 12, Trump posted, "Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!"

He didn't address the tariffs on Oct. 14, when talking about China trade with reporters.

However, a little later, he posted on social media: "I believe that China purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers, is an Economically Hostile Act. We are considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution. As an example, we can easily produce Cooking Oil ourselves, we don’t need to purchase it from China."

Treasury Secretary Scott Bessent, one of the two leaders of negotiations with Chinese politicians, expressed surprise that China chose to announce an extraterritorial export control licensing regime for rare earths and products containing rare earths.

The new measures also forbid Chinese citizens from working overseas on rare earth mining or processing projects or magnet manufacturing unless the Chinese government approves.

"We are not sure where this came from," or why China acted now, Bessent said Oct. 13 on Fox Business, calling it "a provocative move."

He added, "We had substantially de-escalated."

The Chinese Commerce Ministry, in a statement in English posted on social media, showed that China didn't see it that way. "Particularly since the China-U.S. economic and trade talks in Madrid in September, the U.S., in just 20 days, has introduced a string of new restrictive measures targeting China. It has put multiple Chinese entities on the Entity List and Special Designated National List; arbitrarily expanded the scope of control over businesses with the Affiliates Rule that affects thousands of Chinese companies; and persisted with the implementation of Section 301 measures targeting China’s maritime, logistics and shipbuilding industries in disregard of China’s concerns and goodwill."

The ministry said its export controls are aimed at military uses. It emphasized twice that it is not cutting off supplies to consumer electronics, civil aviation or automotive sectors.

"China’s export controls are not export bans. Licenses will be granted for eligible applications," the statement said. Later, the post said, "I want to emphasize that China’s export controls are not export bans. All applications of compliant export for civil use can get approval, so that relevant businesses have no need to worry."

It said U.S. complaints about the export controls reflected a double standard, and said the U.S. for years "has been overstretching the concept of national security, abusing export control, taking discriminatory actions against China, and imposing unilateral long-arm jurisdiction measures on various products including semiconductor equipment and chips."

The ministry said these actions "have severely harmed China’s interests and undermined the atmosphere of bilateral economic and trade talks, and China is resolutely opposed to them."

U.S. Trade Representative Jamieson Greer, the other lead negotiator with China, said on CNBC on Oct. 14 that the Chinese announcement was "completely disproportionate to anything the U.S. is doing."

Greer said high-level staff talked as recently as Oct. 13 about rare-earth restrictions. When asked if there was any indication China could backtrack, he replied, "We will just have to see where that goes. It's hard for them to find an off-ramp at this point. I think they have realized that they've overstepped."

When asked if the 100% tariffs the president said would come Nov. 1 are going to happen, Greer pointed out that the president said they could come sooner.

"I think a lot depends on what the Chinese do," he said. "They are the ones who have chosen to make this major escalation. Our agreement was: we will keep the tariffs low, if you keep the rare earths flowing."

Both Bessent and Greer said the meeting in Korea between Donald Trump and Xi Jinping is not canceled yet. (Trump had said on Oct. 10 that it wouldn't happen.)

Bessent said, "They have pointed a bazooka ... at the industrial base of the entire free world."

Greer said, "We can’t have a situation where the Chinese keep this regime in place where they want to have veto power of the world’s high-tech supply chains."

However, Bessent also said, "I believe China is open to discussion on this. And if not, we have substantial levels on our side we can pull."

He said the fact that Trump set a date weeks away left room for negotiation.

"I am optimistic this can be de-escalated," he said.

Outside experts said China made this announcement to be in a stronger place ahead of a meeting.

Sidley Austin's Ted Murphy blogged, "While these are significant developments (that should be taken very seriously), there may be a chance for cooler heads to prevail -- on both sides. President Trump was intending to (and may still) meet with President Xi in a few weeks on the sidelines of the APEC summit in Korea. The two sides have lots to discuss -- e.g., China’s purchase (or lack thereof) of U.S. agricultural products; the United States removing the IEEPA fentanyl tariff; China’s processing of export licenses for rare earth materials; U.S. export controls on semiconductors, etc. China was likely looking to level the playing field with the United States before any negotiations began. While President Trump’s posts suggest that the United States (and other countries) were surprised by China’s actions, he also left some room for negotiation by not imposing the additional tariffs and increased export controls immediately -- instead, he targeted November 1, 2025. This suggests that there may be time for the two sides to negotiate."

Wendy Cutler, a former top career trade negotiator at USTR with Asian expertise, wrote on LinkedIn: "The Administration should not have been shocked by Beijing’s latest moves. The U.S. is now dealing with a more assertive, well-prepared, less U.S.-dependent and self-confident Beijing than during Trump 1.0. The Phase one agreement largely consisted of Chinese concessions on matters of concern to Washington. The past 24 hours leave no doubt that those days are over."