The nightmare of a renewed and even more violent tariff war between the United States and China is back all over the world. A war that also concerns Europe, not only from a commercial but also a financial point of view, with the stock markets of the Old Continent closing in decline and car stocks plummeting.
The object of dispute this time is Beijing’s clampdown on rare mineral exports. A “very hostile” act for Donald Trump who threatened heavy retaliation and the cancellation of the expected meeting with President Xi in South Korea in two weeks. “I am considering a massive increase in tariffs on Chinese products coming into the United States,” the American president warned on Truth.
“It was a real surprise, not just to me, but to all the leaders of the free world,” he added, speaking of a series of “letters sent” by China to countries around the world threatening greater controls on access to rare earths and exports of the minerals found there. At the beginning of the year, Beijing had introduced restrictions limiting the supplies needed by American car manufacturers and defense companies. The Dragon significantly increased export controls this week, saying among other things that any maker of advanced chips anywhere in the world must obtain a license to use Chinese minerals. China dominates the global supply chain for many of these minerals, and the measures have caused anxiety among American and European companies. Brussels expressed its concern about Beijing’s move on Thursday. “We are analyzing the details: the European Commission expects China to act as a reliable partner and ensure stable and predictable access to critical raw materials,” said trade spokesman Olof Gill.
During the EU-China summit in July, the official recalled, “the parties agreed to strengthen trade relations by increasing transparency and giving guarantees to EU companies, in particular in the magnets and rare earths sector”. “We have been contacted by other countries who are extremely angry about this great commercial hostility, which came out of nowhere”, insisted The Donald for his part, even insinuating that it was no coincidence that the Chinese authorities sent the letters about the increase in controls precisely “in the days in which, after three thousand years of chaos and fighting, there will be peace in the Middle East”.
“As president of the United States I will financially counter their move,” the tycoon then warned, casting doubt on his meeting with Xi. “I did not speak to President Xi because there was no reason to do so,” he wrote, explaining that relations between the two super powers had been “good” in the last six months. But now that “I was supposed to meet the Chinese president at Apec in South Korea there no longer seems to be a reason to do so”.
Fears about the start of a new heavy chapter in the tariff war had an immediate effect on the stock markets. Wall Street, already teetering on the edge of a shutdown after five straight months of gains, was falling in mid-afternoon trading. And European stock markets closed lower after proceeding uncertainly for much of the session. Paris, struggling with the political crisis, lost 1.53%, Frankfurt 1.5% and London 0.86 percent. Piazza Affari had a heavy session with the Ftse Mib index dropping 1.74% to 42,047. Due to Trump’s new threats, Stellantis took a nosedive at the end (-7.27%). Tenaris and Leonardo thus slipped by 5.22% and Leonardo by 4.65% on an already negative day for defense stocks after the ceasefire in Gaza.