China Bets on Stock Market Pressure in Trade Stand-Off with U.S.
According to The Wall Street Journal, Chinese officials believe President Donald Trump’s focus on the stock market gives them an advantage in the ongoing trade dispute. They calculate that the U.S. cannot afford a prolonged and intensifying trade war, a scenario they expect would cause financial markets to fall and pressure the President into making concessions.
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The Trump administration, however, rejected the idea that market performance would influence negotiations. “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,” Treasury Secretary Scott Bessent stated at a CNBC event. He added that the U.S. is not seeking to escalate trade tensions following the President’s recent triple-digit tariff threats, which caused a market plunge last Friday. The Dow Jones Industrial Average posted its worst one-day performance since April, when the President’s trade wars began.
While the President has dialed down his aggressive rhetoric, Bessent emphasized that further retaliatory measures are not off the table. “We have lots of levers that we can pull for products that they need that could be equally damaging. We don’t want to damage their economy,” Bessent said. “We don’t believe that they want to damage ours. But they are a command and control economy, and they are going to neither command nor control us.”
Tensions escalated after Beijing imposed export restrictions on rare earth minerals for the second time this year. These minerals are critical components for electronics, automobiles, and other goods, and the move threatens supply chains. The latest stand-off precedes a scheduled meeting between President Trump and Chinese leader Xi Jinping at an economic summit in South Korea later this month, which Bessent confirmed is still set to occur.
In a related development, President Trump threatened to enact a U.S. embargo on Chinese cooking oil sales in a social media post. Data from the Department of Agriculture shows the U.S. accounted for 43% of China’s used cooking oil exports in 2024.
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