Trade Truce Is Under Pressure. Beijing Responds as Trump Say

[source image]
Dow Jones NewsMay 30, 3:48 PM UTC
DJ Trade Truce Is Under Pressure. Beijing Responds as Trump Says China Violated Deal. -- Barrons.com

By Reshma Kapadia

 

Within weeks of Washington's trade truce with Beijing, the trans-Pacific tit for tat has restarted.

 

President Donald Trump on Friday posted that China has "totally violated its agreement with us," a day after the State Department said it would revoke visas of Chinese students in the U.S. And China is pushing back.

 

It amounts to another dose of uncertainty for a trade picture already made more complex by this week's court decisions, now under appeal, that many of the White House's levies are illegal. The S&P 500 was 0.3% lower in late morning.

 

Trump's remarks, made on Truth Social, refer to China agreeing in a joint communiqué to lift non-tariff retaliatory measures it put on the U.S. after Trump's April 2 tariff blitz. Analysts note that agreement included export controls China implemented to restrict U.S. access to critical minerals, including magnets for autos and military use. The U.S. agreed to ratchet back its tariffs, and both agreed to take the steps by May 14.

 

In a statement Friday, Liu Pengyu, a Chinese embassy spokesperson, said that the two sides have maintained communications since the talks in Geneva. "Recently, China has repeatedly raised concerns with the US regarding its abuse of export control measures in the semiconductor sector and other related practices," he said. "China once again urges the US to immediately correct its erroneous actions, cease discriminatory restrictions against China and jointly uphold the consensus reached at the high-level talks in Geneva."

 

Markets cheered the Geneva agreement but veteran trade watchers wanted to see progress in ensuing weeks. Trade experts were watching whether China's rare earth restrictions would be lifted and if the two countries could come to some sort of agreement around the flow of fentanyl into the U.S. to gauge if negotiations between the two countries were on track.

 

One of the issues centers around export controls on both sides: how fast China lifts its post-April 2 restrictions and a continued push by the U.S. to restrict China's access to technology, including its warnings just days after the Geneva agreement to companies to not use Huawei's AI chips.

 

Also problematic are signals such as the State Department's decision this week to "aggressively" revoke visas of Chinese students in the U.S. -- a move Beijing described as "unreasonable."

 

Treasury Secretary Scott Bessent on Thursday night in a Fox interview described the talks with China "a bit stalled," though he said he believed there would be more negotiations in the next few weeks. The Treasury Department didn't immediately respond to a request for comment on Friday.

 

The latest exchange of comments comes against an increasingly complex trade backdrop. While two courts have blocked the Trump administration's use of the International Emergency Economic Powers Act for the April 2 tariffs and those implemented against China, Canada, and Mexico related to fentanyl flows, the administration has appealed those decisions. That leaves the trade situation in legal limbo.

 

Trade watchers see a battle within the administration between those looking to take a harder-line approach against China and those with an eye to markets as complicating the picture.

 

"We're not on a stable path toward lower tensions," says Philip Luck, director of the Center for Strategic & International Studies Economics Program and former State Department deputy chief economist. "Export controls and migration are already flashpoints, and I expect trade to be back on the table soon,"

 

Write to Reshma Kapadia at [e-mail]

 

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

 

May 30, 2025 11:48 ET (15:48 GMT)

 
Copyright © 2025 Dow Jones & Company, Inc.