China accuses US of violating trade truce over chip curbs, vows retaliation

US-China truce in jeopardy as Washington and Beijing trade accusations over Geneva trade agreement violations

China has accused the United States of breaching the terms of a recent trade agreement, escalating tensions between the world’s two largest economies just weeks after a temporary truce brought hope for renewed dialogue.

 

The Chinese Ministry of Commerce on Monday issued a statement rejecting US President Donald Trump’s claims that Beijing had violated the trade consensus reached in Geneva last month. The ministry denounced a series of fresh US trade measures as "discriminatory", warning that China would take "resolute and forceful measures" to protect its interests if the US continued on its current path.

 

Beijing cited Washington's unilateral actions, including new export restrictions on advanced AI chip technologies and chip design software, as well as the revocation of Chinese student visas, as evidence of the US breaching the agreement. The ministry also referenced an earlier understanding between Trump and Chinese President Xi Jinping on January 17, suggesting the latest US moves violated that accord as well.

 

 

“If the US insists on its own way and continues to damage China’s interests, China will continue to take resolute and forceful measures to safeguard its legitimate rights and interests,” the ministry said.

 

Trump accuses China of trade violations, threatens fresh tariffs

On Friday, Trump claimed via a post on his Truth Social platform that China had “TOTALLY VIOLATED ITS AGREEMENT WITH US", accusing Beijing of backsliding on its trade promises without specifying details. Trump declared the US would double tariffs on both steel and aluminium imports from China, to 50 per cent from 25 per cent, beginning next week.

 

Although China is the world’s largest steel exporter, it has sent minimal volumes to the US since Trump imposed 25 per cent tariffs in 2018. However, China is currently the third-largest supplier of aluminium to the US.

 

Trump also alleged that the temporary May deal to ease triple-digit tariffs for 90 days had been made to save China from what he called “a devastating situation” of factory shutdowns and civil unrest. The brief tariff rollback, hailed by markets at the time, had reduced the effective US tariff rate to the mid-teens, down from around 25 per cent earlier this year.

 

Did China violate US trade agreement?

While Trump did not specify how China had allegedly violated the trade agreement made in Geneva, US Trade Representative Jamieson Greer accused China of failing to accelerate exports of critical minerals essential for advanced electronics. Greer told CNBC that China was “slow-rolling their compliance”, calling Beijing’s approach “completely unacceptable”. He added that the US would need to address the issue, though he did not elaborate on what actions may be taken.

 

The Geneva agreement in mid-May included a 90-day pause on sweeping tariffs.

 

Are US-China trade talks in limbo again?

Earlier last week, Treasury Secretary Scott Bessent acknowledged that talks with China were “a bit stalled” and indicated that direct intervention from both Trump and Xi might be necessary to break the deadlock. “Getting a deal over the finish line will likely need the direct involvement of Trump and Xi,” he said in an interview with Fox News.

 

White House economic adviser Kevin Hassett had also earlier said a phone call between the leaders was likely this week, but no confirmation has come from Beijing.

 

Despite the rising political rhetoric, US stock markets ended last week relatively flat. Trump’s renewed complaints came just two days after he was reportedly angered by a journalist's reference to Wall Street's new acronym 'TACO', short for 'Trump Always Chickens Out', used to describe expectations that he will ultimately soften on aggressive trade actions.