BURSTStocks closed with sharp losses Friday after President Trump threatened to impose new "massive" tariffs on China in response to new export control rules from Beijing.
In a Friday post on social media, Trump said his administration was considering various ways to respond to the country's latest restrictions on rare metals exports, including "a massive increase of Tariffs on Chinese products" and restrictions on US exports to China.
"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." Trump wrote on Truth Social, expressing shock and dismay at the new export controls.
"I never thought it would come to this but perhaps, as with all things, the time has come," he wrote.
Trump's message and the prospect of higher tariffs shook Wall Street on Friday afternoon, hours before markets were set to close for a three-day weekend ahead of Monday's federal holiday.
The Dow Jones Industrial Average lost 876 points on the day, closing with a loss of 1.9 percent. The S&P 500 index fell 2.7 percent, and the tech-heavy Nasdaq composite plunged 3.6 percent before the closing bell.
China controls roughly 70 percent of the world's rare metals and earths, which are essential materials for manufacturing semiconductor chips. Both the U.S. and China have taken escalating measures to protect their own semiconductor production capabilities and prevent aiding each other as both seek to dominate the artificial intelligence (AI) race.
Under the new regulations from Beijing, Chinese firms must acquire "case-by-case approval" to export rare earths and other semiconductor materials. The new rules also apply to technology used to process rare metals into semiconductor components.
Friday marked a significant step backward for the U.S. and China after months of negotiations following Trump's imposition of tariffs on Chinese goods. Trump and Xi were expected to meet at the Asia-Pacific Economic Cooperation (APEC) summit this month, with hopes of hammering out a final trade deal.
Trump, however, said Friday "there seems to be no reason to do so" and suggested Xi sought to overshadow the news of the emerging Israel-Hamas ceasefire.
"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?" Trump wrote.