The US-China trade relationship faces renewed tension as Donald Trump warns China of heavy tariffs unless a satisfactory deal is achieved before he meets with Xi Jinping. The US President signalled that the two nations could reach a “fantastic deal.” He also warned that failure to secure an agreement might result in China facing potential tariffs of up to 155%.
Hosting Australian Prime Minister Anthony Albanese at the White House, Trump said, "I think we’re going to end up having a fantastic deal with China. It’s going to be a great trade deal. It’s going to be fantastic for both countries, and it’s going to be fantastic for the entire world."
"I think China’s been very respectful of us. They are paying tremendous amounts of money to us in the form of tariffs. As you know, they are paying 55%, that's a lot of money...A lot of countries took advantage of the US and they are not able to take advantage anymore. China’s paying 55% and a potential 155% come November 1st unless we make a deal. I am meeting with President Xi. We have a very good relationship, we are going to be meeting in South Korea in a couple of weeks...I think we are going to work out something good for both the countries," he added.
"You know, they paid a lot during my first administration, my first term. Now they're paying an unbelievable amount of money to the United States. They probably can't pay that much. And I'm okay with that. We can lower that. But they have to do things for us too. It's no longer a one-way street," Trump added.
Trump’s remarks came after Beijing tightened export controls on rare earth materials, which are important for smartphones, fighter jets, electric vehicles and other advanced technologies. Under the new rules, foreign companies now need the Chinese government's approval to export products that contain even a tiny amount of rare earths and must declare their intended use.
"Provided the export licence applications are compliant and intended for civilian use, they will be approved," China’s commerce ministry spokesperson said.
“China's rare earth exports also account for around 70% of the world's supply of metals used for magnets in electric vehicle motors,” said Natasha Jha Bhaskar from advisory firm the Newland Global Group.
Additionally, the world's two biggest economies also imposed new port fees on each other's ships.
Trump has emphasised tariffs as a key negotiating tool with China, threatening a new 100% tariff in response to Beijing’s expanded export controls on rare earth products.
Speaking to reporters, Trump said he maintained a "very good relationship" with Xi. "We're having disputes on things. They're paying us a tremendous amount of money in tariffs. They'd probably like to have it be less, and we'll work on that. But they have to give us some things too," he added.
Since his return to the White House, Donald Trump has imposed additional 30% tariffs, raising the total on Chinese goods to roughly 55–57%, which he claims has generated “hundreds of billions” in revenue.
He suggested that the tariff threat has earned the US “great respect” from Beijing, though Chinese officials have rejected this strategy, describing high tariffs as the wrong approach to managing relations.
Trump, who has long touted tariffs as a diplomatic weapon, said, "A lot of countries took advantage of the US, and they are not able to take advantage anymore".
Trump had earlier announced plans to impose 100 per cent tariffs on Chinese goods and introduce new export restrictions on "any and all critical software" starting November 1. The proposed duties would come on top of the existing 55 per cent tariffs already levied on Chinese imports.
During a meeting with US private equity groups, Blackstone's chief executive Stephen Schwarzman and China's Foreign Minister Wang Yi highlighted the need for detailed talks between the nations.
"The two sides should engage in effective communication, properly resolve differences and promote stable, healthy and sustainable development of China-US relations," Wang said, according to the ministry's website.
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Despite his tough trade stance, Trump expressed a preference for reaching a deal, emphasising his reportedly strong relationship with Chinese President Xi Jinping.
US Treasury Secretary Scott Bessent recently said that US and Chinese officials would hold discussions in Malaysia this week, despite reports stating that the Trump-Jinping meet was going to be cancelled.
China's economy is reliant on the income from the goods it manufactures and exports. The latest official figures show its exports to the US were down by 27% compared to last year. Moreover, the trade war has hit its manufacturers badly. Manufacturers are hoping for an ease in tariff rates following the meeting between Trump and Xi Jinping.