The total value of goods exchanged between the US and China plunged below 2020's pandemic era low in the second month of the new tariff war between two nations.

Chinese state media warned the Trump administration against striking deals that sideline China, after the president announced that Asian countries would face higher tariffs starting on Aug. 1.

China has vowed to roll out 'firm countermeasures' in the face of Donald Trump's new tariffs, accusing the US President of 'violating trade rules' and trying to 'intimidate' the world. No other country comes close to matching China's annual sales of more than $400 billion in goods to the United States each year.

China's producer deflation deepened to its worst level in almost two years in June as the economy grappled with uncertainty over a global trade war and subdued demand at home, piling pressure on policymakers to roll out more support measures.

Rare earths at a factory in Tianjin, China. Manufacturers speak of resilience yet some keep only a week’s supply of rare earth magnets in their inventories © Doug Kanter/Bloomberg China’s weaponisatio

After years of mounting concern over deflation and the bruising price wars that have plagued much of China’s economy, President Xi Jinping’s government is showing signs of finally taking action.

Its new deal with Vietnam and its fresh tariff threats issued to many other countries seem designed to reduce China’s role in their supply chain. Countries that had hoped to stay out of the new cold war now fear they are being forced to pick a side. To appease the world’s biggest market, they must anger the world’s biggest trader.

China confirmed that it had agreed with the U.S. to approve the accelerated export of rare earths after President Donald Trump said he had signed a trade deal with Beijing, and said Washington will also lift some of its export restrictions on Beijing in return.