In an escalating trade conflict with the United States, China is reportedly shifting its strategy, aiming to leverage President Donald Trump’s focus on the stock market. According to a recent report from The Wall Street Journal, Chinese officials believe that a prolonged trade war would negatively impact U.S. financial markets, prompting Trump to ultimately seek concessions. They contend that the U.S. cannot sustain an extended conflict that threatens to destabilize its economy.
However, the Trump administration has swiftly responded to quell any notions of negotiating under pressure. Treasury Secretary Scott Bessent appeared on CNBC, stating definitively that the U.S. will not engage in negotiations simply due to market fluctuations. “We won’t negotiate because the stock market is going down; we will negotiate because we are doing what is best economically for the U.S.,” he asserted.
Bessent emphasized that the U.S. does not intend to escalate trade tensions, despite the president’s recent threats of imposing substantial tariffs, which significantly affected market performance, including the Dow Jones Industrial Average experiencing its worst one-day drop since April. While Trump’s tone has since softened, Bessent made it clear that the U.S. retains various options for further retaliation. “We have lots of levers that we can pull for products that they need that could be equally damaging,” he remarked, though he expressed a mutual desire to avoid damaging either economy.
The trade war reached a heightened state of tension following China’s recent decision to impose export restrictions on rare earth minerals for the second time this year. These minerals are crucial for a plethora of technological applications, including electronics and automotive manufacturing, further complicating supply chains and prompting concerns over economic fallout.
This latest downturn in relations comes at a crucial time, as Trump and Chinese leader Xi Jinping are set to meet at an economic summit in South Korea later this month. Bessent confirmed that the meeting is still on schedule as of this Wednesday.
On the diplomatic front, Trump has also hinted at imposing a U.S. embargo on Chinese cooking oil sales, highlighting the intricacies of the trade dynamics. The U.S. accounted for a substantial 43% of China’s used cooking oil exports in 2024, according to the Department of Agriculture, indicating the wide-reaching implications of trade decisions on both economies.
As both nations navigate this complex landscape, the outcome of their negotiations could significantly impact not just bilateral relations, but the broader global market as well.
