Shares of major U.S.-listed Chinese companies fell sharply on Friday after U.S. President Donald Trump suggested he may impose “massive” tariffs on Chinese imports in response to China’s actions regarding rare earth metals. The news raised concerns about escalating U.S.-China tensions and potential supply chain disruptions.
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In response, shares of Chinese electric vehicle makers, NIO (NIO) and XPeng (XPEV), were down 7% and 6%, respectively. Also, e-commerce and tech giants saw steep drops. Baidu (BIDU) and Alibaba (BABA) fell 5.5% each, and JD.com (JD) dropped 4.6%.
At the same time, U.S. retailers with large manufacturing footprints in China saw significant declines. Best Buy (BBY) and American Eagle (AEO) were down over 5%. Also, Ralph Lauren (RL), Lululemon (LULU), Nike (NKE), and Gap (GPS) all saw shares decline by around 2%.
Trump’s Threatening Statement
The market anxiety followed President Trump’s lengthy post on Truth Social, where he accused China of becoming “very hostile” and attempting to leverage its position by imposing export controls on rare earth elements and other products.
He stated, “There is no way that China should be allowed to hold the World ‘captive,’ but that seems to have been their plan for quite some time.”
In response, Trump threatened a “massive increase” in tariffs targeting Chinese products entering the U.S., a move he said would be “potentially painful.” It must be noted that tariffs on Chinese imports currently stand at 30%, a significant reduction from the high of 145% imposed earlier this year.
Furthermore, Trump said he sees “no reason” to proceed with a planned meeting with President Xi at the upcoming APEC summit in South Korea. This development comes as the current U.S.-China trade truce is set to expire in less than a month, signaling a likely return to full-scale trade conflict.