China hits back at ‘discriminatory’ chip restrictions as US mulls further action
President Donald Trump has accused China of “totally” violating a recent trade agreement, triggering a fresh wave of economic tension between the world’s two largest economies just weeks after a temporary truce on tariffs was reached in Geneva.
In a post on Truth Social, Trump wrote: “The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!” He did not specify which part of the agreement had been breached but claimed that China had reneged on its commitments.
The Geneva deal, struck on 12 May, included a 90-day suspension of most reciprocal tariffs. Under the terms, the US agreed to reduce additional tariffs on Chinese imports from 145% to 30%, while China lowered its retaliatory duties from 125% to 10%. The pause did not apply to levies on cars, steel, aluminium, or those tied to US accusations about China’s role in the illicit drug trade.
But momentum from the deal appears to have stalled. US Trade Representative Jamieson Greer accused Beijing of “slow-rolling” compliance, particularly with respect to non-tariff barriers and rare earth exports, which are crucial to defence and semiconductor industries. “The United States did exactly what it was supposed to do,” Greer told CNBC. “The Chinese are slow-rolling their compliance which is completely unacceptable and has to be addressed.”
Treasury Secretary Scott Bessent also said talks were “a bit stalled” and indicated a call between Trump and Chinese President Xi Jinping might be required to break the impasse. Although the two leaders have not spoken since January, Trump told reporters he expects to speak with Xi “soon.”
China’s response has focused on US semiconductor export controls, which it called “discriminatory restrictions.” Liu Pengyu, spokesperson for the Chinese embassy in Washington, said the US had “abused” export control measures and urged Washington to “correct its erroneous actions.”
Earlier this month, the US banned imports and use of AI chips from Huawei and issued letters to chip design firms including Synopsys and Cadence to halt sales to China. Nvidia said restrictions on its H20 chip—custom built to comply with 2022 rules—would cost it up to US$8bn in lost sales this quarter. “That assumption was always questionable, and now it’s clearly wrong,” CEO Jensen Huang said, referring to the US belief that China couldn’t make its own AI chips.
Tensions also escalated with the US decision to begin revoking Chinese student visas and further scrutiny of technology exports. Senior Trump adviser Stephen Miller told reporters that Beijing had failed to meet its obligations and warned of “all manner of action” being considered.
Markets reacted nervously. The Dow fell 230 points midday Friday, while the Nasdaq slid 1.48%. Investors are weighing the risk of renewed tariff escalation alongside legal uncertainty after a US trade court ruled Trump had exceeded his authority by imposing sweeping tariffs—a decision that was temporarily paused on appeal.
Meanwhile, French President Emmanuel Macron, speaking at the Shangri-La Dialogue in Singapore, warned that divisions between the US and China were undermining global order. “If we choose sides, we will destroy methodically all the institutions we created after the Second World War,” Macron said.
