Description: US President Donald Trump has considerably downplayed the possibility that he would meet Chinese President Xi Jinping this month on the margins of the APEC Summit. Trump’s statement arrives after recent tit for tat measures undertaken by both countries which started with the US taxing Chinese ships of up to $50 per net ton. China responded by its own taxation over all and any US operated and owned ships docking Chinese ports with levies of up to $56 per net ton. China additionally rattled the US by imposing more strict restrictions on rare earth minerals last week which was perceived by Trump as very hostile and a move which was completely unexpected following the successful bilateral trade negotiations in Switzerland and the UK earlier this year. Trump ultimately threatened to hike tariffs to 100% on Chinese imports if China’s position does not change before 01 Nov.
Impact: The trade war between China and the US is expectedly heating up before a potential meeting between Xi and Trump later this month. The two largest global powers exchanged blows through taxing sensitive industries such as maritime trade and rare earth minerals. The move by the US to add additional tariffs on Chinese ships is a move aimed at testing the current trade waters ahead of the leaders meeting while China’s additional restrictions on rare earth minerals is power posturing which emphasizes the country’s dominant position in the industry. China’s position has been exclusively reactive in the trade war instigated by Trump, however, the latest restrictions and additional tariffs on US operated and owned ships represents a more aggressive active measure in countering trade threats from the US. Ultimately, the moves undertaken by both countries are aimed at dictating the public trade narrative in order to bolster domestic and international political optics. Neither China nor the US could risk subverting progress made from the latest rounds of trade talks which signals that outside of negotiating tactics, the threats would not materialize, and the leaders meeting is still expected to happen. The second scenario is continued escalation which would return global markets and tariffs back to the rates from Apr while diminishing any progress made in the trade talks.