China has raised concerns over the actions taken by the Trump administration that it claims are undermining a recent trade agreement established between the two nations.
On Monday, China’s Commerce Ministry issued a statement accusing the U.S. of compromising the temporary trade agreement made on May 12 by releasing new export control guidelines regarding AI chips, halting the sale of chip design software to China, and planning to revoke visas for Chinese students studying in the U.S.
The ministry asserted that the U.S. actions significantly damage China’s legitimate rights and interests, and noted that they create a sense of instability in already fraught trade relations.
This statement comes in the wake of President Trump’s comments indicating that China is not adhering to the terms of the trade agreement, amidst a backdrop of rising tensions just weeks after both nations had agreed to a temporary easing of tariffs.
Experts have expressed concerns that the renewed hostilities highlight unresolved issues following the Geneva economic and trade talks.
Arthur Kroeber, a China analyst with Gavekal Research, commented that confusion surrounds who is actually directing U.S. trade policy, whether it is President Trump, his trade negotiators, or his national security team.
Kroeber remarked on the lack of clarity around trade objectives, stating, ‘The overall objectives of the trade aggression, other than the display of raw power, are as muddled as ever.’
Despite the growing tensions, Treasury Secretary Scott Bessent expressed optimism over the potential resolution of disputes during a forthcoming conversation between President Trump and Chinese President Xi Jinping.
On the trading floor, Wall Street reflected the apprehension surrounding the escalating trade war, with the S&P 500 dropping 10 points (0.2%) to 5,901, while the Dow Jones Industrial Average and the tech-heavy Nasdaq composite saw declines as well.
Central to the temporary agreement established on May 12 is a 90-day pause on tariffs, which allows both countries to negotiate a more substantive trade deal.
Though the deal has provided a temporary reprieve, it raises concerns about ongoing uncertainty, as tariffs remain higher than they were before tensions escalated in the previous month.
U.S. Trade Representative Jamieson Greer indicated that under the agreement, the Trump administration agreed to reduce a previously imposed 145% tax on certain Chinese imports to 30%, while China committed to lowering its tariff on U.S. goods from 125% to 10%.
Despite China’s compliance in suspending its tariffs in line with the agreement, the Commerce Ministry accused the U.S. of provocatively introducing new economic frictions that exacerbate instability in trade relations.
The ministry specifically pointed to the U.S. restrictions on exports of AI chips and chip design software to China.
Additionally, the U.S. administration’s plan to revoke visas for Chinese students, over 275,000 of whom are studying at American universities, furthers tensions according to China’s statement, impacting a significant population of students.
As the situation continues to unfold, experts warn of the economic risks posed by the escalating disputes between the two largest economies.
Carl Weinberg, chief economist at High Frequency Economics, noted the potential severe repercussions for the global economy should the U.S. and China engage in a complete disengagement accompanied by escalating tariffs.
He emphasized that such a scenario would drastically reduce demand for industrial commodities and disrupt supply chains that span multiple international borders.
This ongoing diplomatic tussle between the U.S. and China remains a focal point, as both nations strive to navigate the complexities of their intertwined economic futures.
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