Beijing is employing a new strategy in its trade war against the U.S.

The Wall Street Journal reported Tuesday that Chinese officials are betting that President Donald Trump's attention towards the stock market serves to their advantage in a trade stand-off with the U.S. By their calculus, the U.S. can't afford a prolonged trade war that keeps intensifying with little end in sight, a prospect they believe would tank financial markets and push Trump to make concessions.

However, the Trump administration moved quickly on Wednesday to shut down the possibility of negotiating with its back against the wall.

\\"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 said at a CNBC event.

Bessent added that the U.S. is not seeking to escalate trade tensions following Trump's triple-digit tariff threats last week. That caused financial markets to plunge on Friday, and the Dow Jones Industrial Average posted its worst one-day performance since April, the start of Trump's all-out trade wars.

The president has since dialed down his aggressive rhetoric, but Bessent emphasized that further retaliatory measures aren't 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.\\"

The simmering trade war between the U.S. and China reached another boiling point in recent days after Beijing imposed export restrictions on rare earth minerals for the second time this year. Those are critical components in most electronic products, autos, and more, and the move jeopardizes supply chains anew.

The latest stand-off comes just as Trump and Chinese leader Xi Jinping are scheduled to meet at an economic summit in South Korea later this month. Bessent said the pair is still set to gather as of Wednesday.

On Wednesday, Trump threatened to enact a U.S. embargo on Chinese cooking oil sales in a social media post. The U.S. accounted for 43% of China’s used cooking oil exports in 2024, according to data from the Department of Agriculture.