Trump threatens 'massive tariffs' on China, says 'now there seems to be no reason' to meet Xi Jinping

US President Donald Trump threatened to impose new tariffs on China in a Truth social post on Friday (Oct 9).Trump also said that he may not meet with Chinese President Xi Jinping amid the Asian country tightening its rules on rare earth elements' export. After Trump's post, the financial markets saw huge drop with S&P 500 going down roughly 1.2 per cent in late morning trade. The US president also accused China of 'becoming very hostile' ahead of their scheduled meet in two weeks' time in South Korea.

Why is Trump threatening China with tariffs again?

“I have not spoken to President Xi because there was no reason to do so… I was to meet President Xi in two weeks at APEC, but now there seems to be no reason,” Trump wrote in his social media post. He also called out China's latest policy announcement on the rare earth elements and said: "They want to impose Export Controls on each and every element of production having to do with Rare Earths," which according to Trump, "would clog the markets."

Trump also questioned China's timing of sending the letter to countries about its policy on rare earth element export and said: "The Chinese letters were especially inappropriate in that this was the Day that, after three thousand years of bedlam and fighting, there is PEACE IN THE MIDDLE EAST." In a response to China, Trump also confirmed imposing “massive increase of Tariffs on Chinese products.”

Markets down after Trump's post

As soon as Trump posted these matters on social media, the financial markets were down in the late morning trade in New York as a result. The Dow Jones Industrial Average was down 560 points, or 1.2 per cent and the S&P 500 lost 1.7 per cent. The setback on the market came as US government shutdown entered its 10th day on October 10 - adding to already bearish sentiment of the market.