US President Donald Trump has threatened to place an additional 100 per cent tax on Chinese imports starting on November 1 or sooner, potentially escalating tariff rates close to levels that in April fanned fears of a global recession.
Mr Trump expressed frustration with new export controls placed on rare earth elements by China.
He said on social media that "there seems to be no reason" to meet with Chinese leader Xi Jinping as part of an upcoming trip to South Korea.
Mr Trump later told reporters he had not cancelled his meeting.
"But I don't know that we're going to have it," he said during an Oval Office appearance on another subject.
"I'm going to be there regardless, so I would assume we might have it."
Mr Trump also suggested there may be time to ratchet down his steep new tariff threat.
"We're going to have to see what happens. That's why I made it November 1," he said.
Trump responds to China's new restrictions
On Thursday, the Chinese government restricted access to rare earth minerals, requiring foreign companies to get special approval for shipping the metallic elements abroad.
It also announced permitting requirements on exports of technologies used in the mining, smelting and recycling of rare earths, adding that any export requests for products used in military goods would be rejected.
On social media, Mr Trump described the export controls as "shocking" and "out of the blue."
He said China was "becoming very hostile" by holding the world "captive" in restricting access to the metals and magnets. They are used in electronics, computer chips, lasers, jet engines and other technologies.
The president also said the US government would respond to China by putting its own export controls "on any and all critical software" from American firms.
The Chinese Embassy in Washington did not immediately respond to an Associated Press request for comment.
Worst market day since last tariff threat
The S&P 500 tumbled 2.7 per cent on Friday on worries about the rising tensions between the world's largest economies.
It was the market's worst day since April when the president last bandied about import taxes this high.
Still, the stock market closed before the president spelled out the terms of his threat.
Import taxes being heaped on top of the 30 per cent already being levied on Chinese goods could, by the administration's past statements, cause trade to break down between the US and China.
That could cause growth worldwide to slump in addition to the rekindling of a global trade war.
While Mr Trump's wording was definitive, he is also famously known for backing down from threats.
Earlier this year, some investors began engaging in what the Financial Times called the "TACO" trade, which stands for "Trump Always Chickens Out".
The prospect of tariffs this large could compound the president's own political worries.
It could potentially push up inflation at a moment when the job market appears fragile as the impact from a government shutdown starts to compound with lay-offs of federal workers.
The US and China have been jostling for advantage in trade talks, after the import taxes announced earlier this year triggered the trade war.
Both countries agreed to ratchet down tariffs after negotiations in Switzerland and the UK.
But tensions remain as China has continued to restrict America's access to the difficult-to-mine rare earths needed for a wide array of US technologies.
Craig Singleton, senior director of the China program at the Foundation for Defense of Democracies, said Mr Trump's post could "mark the beginning of the end of the tariff truce" that had lowered the tax rates charged by both countries.
"Mutually assured disruption between the two sides is no longer a metaphor," Mr Singleton said.
"Both sides are reaching for their economic weapons at the same time, and neither seems willing to back down."
AP
