In mid-May, the United States and China agreed to a 90-day trade truce aimed at rolling back triple-digit tariffs, offering a temporary reprieve to global markets rattled by escalating trade tensions. However, just weeks later, the fragile agreement is now under threat as both sides accuse each other of violating the deal.

United States Claims 

On Friday, U.S. President Donald Trump publicly accused China of failing to honor the agreement, specifically citing slow progress on China’s promises to issue export licenses for critical rare earth minerals essential to U.S. industries like semiconductors, electronics, and defense. Trump declared on his Truth Social platform that “China HAS TOTALLY VIOLATED ITS AGREEMENT WITH US,” and followed up by announcing a doubling of U.S. tariffs on steel and aluminum to 50%, starting next week and Wednesday respectively.

A U.S. official confirmed China’s sluggish compliance, highlighting that the delay in lifting trade countermeasures for rare earth exports is “completely unacceptable” and must be addressed. As reported by Reuters, the rare earths shortage has already raised alarms among global auto executives, who warn that a disruption could force factory shutdowns within weeks.

Despite the truce easing some tariff pressures—with the effective U.S. tariff rate dropping from around 25% in April to the mid-teens—the underlying disputes over China’s state-driven economic model remain unresolved.

Meanwhile, Trump reaffirmed his intent to continue negotiations, stating in the Oval Office that he hopes to speak and ‘work it out’  with President Xi, even as the situation escalates. Recent legal setbacks, including a U.S. court ruling invalidating broad global tariffs imposed by Trump, have added uncertainty to the administration’s trade strategy.

Chinese Claims

The Chinese commerce ministry countered on Monday, asserting that it was the US that had undermined the truce and the broader consensus established during the May negotiations in Geneva and a subsequent call between Trump and Chinese President Xi Jinping in January. The ministry did not specify what retaliatory measures it might pursue in response.

According to Beijing, the US has introduced a series of “discriminatory restrictive measures,” including:

  • New export control guidelines targeting AI chips,
  • A halt to the sale of chip design software to Chinese firms,
  • The revocation of Chinese student visas.

China emphasized its commitment to defending its rights and interests and denied any breach of the agreement. The US, meanwhile, has suggested that another high-level call between Trump and Xi may take place soon in an effort to revive talks.

In a statement, China’s commerce ministry stated that the actions taken by the United States have deepened uncertainty and instability in bilateral trade relations.