Shares of U.S.-listed Chinese companies plunged on Friday morning after US President Donald Trump threatened new “massive” tariffs on Chinese goods and accused Beijing of “hostile” trade actions related to rare earth exports.
The selloff deepened across broader markets, as investors reacted to Trump’s remarks on his Truth Social platform.
As of press time, the Dow Jones Industrial Average was falling more than 260 points, while the S&P 500 dropped 0.9% and the Nasdaq Composite lost 1.4%,
“Some very strange things are happening in China! They are becoming very hostile,” Trump wrote, alleging that Beijing had sent letters to multiple countries detailing plans to impose export controls on rare earth materials and other key inputs.
The US President warned that the measures could “clog the markets” and disrupt global supply chains (Full statement available below).
Trump said the US was preparing to “financially counter” China’s move and hinted at “a massive increase of tariffs on Chinese products coming into the United States of America.”
The comments fueled fears of renewed trade tensions between the world’s two largest economies.
The EV sector bore the brunt of the selloff, with shares sliding sharply in New York.
Tesla shares are trading nearly 4% lower at $418, on the same day it launched the new Model Y Standard across its left-hand-drive European markets.
As of press time, shares of the EV maker Nio are falling 6.2% at $7.00, while carmakers XPeng and Li Auto are falling 5.2% at $21.71 and 1.6% at $23.23, respectively.
Zeekr, the premium brand under Geely Holding Group which is planned to go private later this year, is trading nearly 2% lower at $23.18.
The market reaction underscored investor concerns that escalating rhetoric could derail fragile economic ties between Washington and Beijing just weeks ahead of a planned meeting between Trump and Chinese President Xi Jinping at the APEC summit in South Korea.
Trump said he now sees “no reason” to attend the meeting.
“China should not be allowed to hold the world captive,” Trump wrote, adding that the U.S. has “much stronger” monopoly positions in other strategic resources but has “not chosen to use them — until now.”
Global automakers increasingly depend on Chinese suppliers for batteries, magnets, and other rare earth materials used in electric vehicles and clean energy products.
Full Statement by US President Donald Trump on Truth Social
“Some very strange things are happening in China!
They are becoming very hostile, and sending letters to Countries throughout the World, that they want to impose Export Controls on each and every element of production having to do with Rare Earths, and virtually anything else they can think of, even if it’s not manufactured in China.
Nobody has ever seen anything like this but, essentially, it would “clog” the Markets, and make life difficult for virtually every Country in the World, especially for China. We have been contacted by other Countries who are extremely angry at this great Trade hostility, which came out of nowhere.
Our relationship with China over the past six months has been a very good one, thereby making this move on Trade an even more surprising one. I have always felt that they’ve been lying in wait, and now, as usual, I have been proven right!
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, starting with the “Magnets” and, other Elements that they have quietly amassed into somewhat of a Monopoly position, a rather sinister and hostile move, to say the least.
But the U.S. has Monopoly positions also, much stronger and more far reaching than China’s. I have just not chosen to use them, there was never a reason for me to do so — UNTIL NOW!
The letter they sent is many pages long, and details, with great specificity, each and every Element that they want to withhold from other Nations.
Things that were routine are no longer routine at all.
I have not spoken to President Xi because there was no reason to do so. This was a real surprise, not only to me, but to all the Leaders of the Free World. I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so.
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. I wonder if that timing was coincidental?
Dependent on what China says about the hostile “order” that they have just put out, I will be forced, as President of the United States of America, to financially counter their move.
For every Element that they have been able to monopolize, we have two. I never thought it would come to this but perhaps, as with all things, the time has come. Ultimately, though potentially painful, it will be a very good thing, in the end, for the U.S.A.
One of the Policies that we are calculating at this moment is a massive increase of Tariffs on Chinese products coming into the United States of America.
There are many other countermeasures that are, likewise, under serious consideration. Thank you for your attention to this matter!”
