Markets have wobbled amid attacks by Scott Bessent on China’s trade policy, after Beijing unveiled sweeping controls on rare earth materials and critical minerals.
The US treasury secretary told the Financial Times: “This is a sign of how weak their economy is, and they want to pull everybody else down with them.”
He said: “Maybe there is some Leninist business model where hurting your customers is a good idea, but they are the largest supplier to the world.
“If they want to slow down the global economy, they will be hurt the most.”
Trade tensions have simmered between the world’s largest two economies following a brief reprieve over the summer, with President Trump threatening a 100 per cent tariff on Chinese imports over the weekend.
This fresh set of US tariffs is set to kick off on the 1st November, on top of existing levies, with Trump also mooting new export controls on “any and all critical software”.
War of words heats up
Trump’s latest trade threats have sparked recession fears, with the FTSE 100 down 0.1 per cent following Bessent’s broadside against China.
Bessent added: “They are in the middle of a recession/depression, and they are trying to export their way out of it. The problem is they’re exacerbating their standing in the world.”
According to the Financial Times report, the US has drafted countermeasures in case trade talks fall through, including export licence requirements for software mentioned by Trump.
A US official told the broadsheet newspaper that Li Chenggang, a senior negotiator for Bessent’s Beijing counterpart He Lifeng, had “previewed” threats of rare earths trade controls over the summer.
The official said: “He was pretty unhinged and very aggressive in stating that the US would face ‘hellfire’ if things didn’t go his way.”
Trump and Chinese President Xi Jinping are set to meet in South Korea on 29 October, with Bessent saying that the meeting will go ahead in spite of planned trade escalations at the beginning of November.