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Trade tension has been going on between the two countries for months China And with words like “thaw” and “truce” swapping out warnings of economic “war,” America seemed to be calming down.
Now, hostilities appear to be returning to full boil.
A series of tit-for-tat moves by the two superpowers this week have thrust trade hostilities back into the global spotlight, roiling markets and raising fears of what might happen next.
“Let’s stop the bears again,” said economist Alexander Tomic, associate dean. boston collegeSaid about renewed fighting. “Let’s stir up the hornet’s nest.”
A look at where things stand in the US-China trade standoff:
There is a stir in the market due to signs of increasing trade war
The tension between China and America transcends any president or political party. But Donald Trump is back white House Has brought new levels of hatred. A large number of tariffs were imposed, increased and reduced in the first half of the year, prompting retaliation from the Chinese leader. Xi JinpingBut recently, there has been relative peace for several months.
That truce showed signs of fading this week, however, as China announced strict new limits on exports of rare earth minerals vital to high-tech products. In return, Trump threatened additional 100% taxes on Chinese imports and export controls on American software by November 1. Both sides also imposed new port charges on each other’s ships.
Whether the public steps by Washington and Beijing are meant to advance private talks between the two sides is unknown. But they rattled stock markets, with the S&P 500 on Friday suffering its worst day since April and a new dose of uncertainty about what will happen next.
“It’s either this, the so-called tariff truce is over and both sides are moving forward quickly or this is pre-talk talks between Xi and Trump,” said Mark Chandler, chief market strategist at Bannockburn Capital Markets in Cincinnati, Ohio.
Compete for profits with exports as bargaining chips
With so much unknown about possible behind-the-scenes negotiations between the two countries, it is difficult to predict who may have the upper hand.
But China may be sensing an opening as Trump continues to be challenged by the government shutdown and the effects of the ongoing trade war.
U.S. soybean farmers who have long depended on Chinese sales are now being shipped to Brazil, Argentina and elsewhere for export. US investors have been happy to see markets rising on enthusiasm over artificial intelligence, but China dominates the world in rare earth minerals that are vital to tech hardware. American consumers who have come to expect an endless supply of cheap goods from Chinese conveyor belts are bracing for higher prices.
“It’s become an issue of who can turn around supply chains faster. And, at least right now, I think China is winning in that,” Tomic said. “I don’t know what the soybean cycle is, but I’m sure you can grow soybeans faster than you can build a toy factory.”
Are tariff threats hollow or a negotiating tactic?
Trump has suggested that compromise is still possible.
He has repeatedly made threats that were used as part of a negotiation strategy, which turned out to be hollow. For now, Trump has not formally canceled a planned meeting with Xi on the sidelines of the Asia-Pacific Economic Cooperation summit later this month, although he said nothing is certain.
“I don’t know that we’re going to get it,” he said in the Oval Office on Friday. “I’m going there regardless, so I think we can have this.”
Chandler said this may seem like a sudden, dramatic blow between the US and China, but in reality it amounts to a long-running bitter feud between the two parties.
“It’s kind of like a divorce: The wife and husband are accusing each other of things that on the outside seem more complicated,” Chandler said. “There is no good guy in this kind of story. We want a good guy and a villain. But these are just two big countries who both want national gain.”
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Matt Sedensky can be reached at msedensky@ap.org and https://x.com/sedensky