US President Donald Trump says he is placing an additional 100 per cent tax on Chinese imports starting on November 1 or sooner, depending on "actions or changes taken by China".
The move would potentially escalate tariff rates close to levels that fanned fears of a steep recession and financial market chaos earlier this year.
The move has sent markets and relations between the world's largest economies into a spiral.
Mr Trump, due to meet Mr Xi in about three weeks in South Korea, complained on social media about what he called China's plans to hold the global economy hostage after China dramatically expanded its rare earths export controls on Thursday.
He said there was no reason to hold the meeting with Mr Xi that he had previously announced. Beijing had never publicly confirmed the meeting between the leaders.
Mr Trump's unexpected broadside had an immediate impact on US stock prices, with the benchmark S&P 500 index sliding by 2 per cent after his social media post.
The "massive" tariff remarks sent investors into the safe haven of US Treasury securities, sending yields on those assets lower, as well as into gold.
The US dollar weakened against a basket of foreign currencies.
'No reason' to meet
In his post, Mr Trump said China had been sending letters to countries worldwide saying it planned to impose export controls on every element of production related to rare earths.
"Dependent on what China says about the hostile 'order' that they have just put out, I will be forced, as President of the United States of America, to financially counter their move," Mr Trump wrote on Truth Social.
"For every Element that they have been able to monopolize, we have two."
He added: "I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so."
The White House and the Chinese embassy in Washington did not immediately respond to a request for comment.
A spokesperson for the US Trade Representative declined to comment, and a spokesperson for the US Treasury did not immediately respond to a request for comment. The two offices have led talks with Beijing on trade.
China's move on Thursday included adding five new elements and extra scrutiny for semiconductor users, and adding dozens of pieces of refining technology to its export-restricting control list. It also required foreign rare earth producers who use Chinese materials to comply with its rules.
China produces more than 90 per cent of the world's processed rare earths and rare earth magnets. The 17 rare earths are vital materials in products ranging from electric vehicles to aircraft engines and military radars.
AP/Reuters
