AsianFin -- The U.S. government is sending mixed signals these days as President Donald Trump seems to open a new front in the trade war with China after he and one of his cabinet members hinted openness to a deal to quell the fresh trade tensions.
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The Trump administration is mulling a ban on cooking oil from China over soybean purchases, according to a post on Trump’s social media Truth Social platform. Trump in the post claimed China is “purposefully” refraining from importing soybeans from U.S., which he described as “an Economically Hostile Act” that hurts American farmers.
“We are considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution. As an example, we can easily produce Cooking Oil ourselves, we don’t need to purchase it from China.” Trump wrote.
Trump’s post, appearing at 3:37 p.m. at Eastern Time, stirred a sellout on the U.S. stock market. The broader market index S&P 500 rose pared gains and closed nearly 0.16% lower on Tuesday. The Nasdaq Composite edged down 0.8%, while the Dow Jones Industrial average rose 0.4%, or 202.88 points after climbing over 450 points, or nearly 1% at midday.
Earlier Tuesday, U.S. Trade Representative Jamieson Greer said American and Chinese officials at the senior staff level spoke as recently as Monday in Washington about the recent rare earth dispute, “We think we’ll be able to work through it.” China’s action will determine whether the tariffs Trump threatened to impose are implemented, he told CNBC.
Trump last Friday posted he would impose an additional 100% tariffs on China as the retaliation for Beijing's recent rare earth export controls. He threatened in a post to cancel his planned meeting with Chinese President Xi Jinping at a APEC summit in South Korea. But later that day he pushed back, stating “I’m going to be there regardless, so I would assume we might have it.”
Trump on Sunday appeared to soften tones on China. “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!! “ Trump posted that day.
U.S. Vice President JD Vance the same day urged Beijing to choose a “reasonable” path. "We're going to find out a lot in the weeks to come about whether China wants to start a trade war with us, or whether they actually want to be reasonable. I hope they choose the path of reason," Vance told Fox News
U.S. Treasury Secretary Scott Bessent on Monday said Trump remains on track to meet China’s Xi in South Korea. U.S. and China had substantial communications over the weekend and more meetings are expected, Bessent said in an interview with Fox Business Network.
Bessent saw U.S.-China staff-level meetings this week in Washington on the sidelines of the World Bank and International Monetary Fund annual gatherings. "The 100% tariff does not have to happen," Bessent said. "The relationship, despite this announcement last week, is good. Lines of communication have reopened, so we'll see where it goes."
Bessent in an interview with the Financial Times accused China of trying to weaken the global economy by slapping export controls on rare earth and minerals. With such move, China is attempting to "pull everyone else down with them", he observed. “If they want to slow down the global economy, they will be hurt the most,” he said.
Greer on Tuesday eched Bessent as he said Trump and Xi Jinping are scheduled to meeting later this month. Though he noted the planned meeting was fluid as the situation is developing.
