China on Monday said Trump administration accusations that it had broken the terms of a trade war truce by holding back key materials were “groundless,” saying that it was in fact the United States that had “seriously damaged” the agreement with its restrictions on Chinese microchips and students.
It was only three weeks ago that the two countries called a 90-day timeout on a tariff war that had dramatically slashed trade between the world’s two largest economies.They agreed to reduce triple-digit tariffs — effectively an embargo — to levels that would at least allow trade to continue while the two sides worked on a formal deal.
But that temporary ceasefire is already under strain amid the accusations and disagreements about what exactly was agreed in Geneva.
By announcing export controls on artificial intelligence chips and revoking Chinese student visas, “the United States had unilaterally provoked new economic and trade tensions,” China’s Ministry of Commerce said in a statement Monday.“Instead of reflecting on itself, it has made bogus accusations and unreasonably denounced China for violating the agreement.”
The most recent exchanges reflect how far apart the two sides remain on a host of issues, and near the top of the list is a dispute over whether Beijing is moving fast enough to ease its export restrictions on rare earths and critical minerals.
While claiming that the goal of tariffs was not to “decouple” from China but to reduce reliance on its products, Treasury Secretary Scott Bessent on Sunday accused Beijing of holding back rare earths and critical minerals that it agreed to “release” in Geneva.“Maybe it’s a glitch in the Chinese system, maybe it’s intentional,” Bessent told CBS.
China, for its part, was angered by Commerce Department guidance, released days after talks in Geneva, warning that the use or sale of Ascend AI chips made by Chinese technology giant Huawei anywhere in the world could violate U.S.export controls — a ruling Beijing said was against the spirit of the trade agreement.
“The big picture is that the two sides resumed negotiations after Geneva, but if you look at the details, it’s more complicated, and each side is still doing things that could undermine that big picture,” said Da Wei, an international relations scholar at Tsinghua University in Beijing.
Chinese state-affiliated commentators have increasingly linked rare earths to U.S.technology controls.
Only if the U.S.relaxes its restrictions on the export of advanced semiconductors to China should Beijing consider easing rare earths controls, said Hu Xijin, a prominent nationalist commentator and former editor in chief of the state-run Global Times.
“No matter what pressure the U.S.
exerts or what tricks it plays, China should not let go of its rare earth trump card,” Hu wrote on social media app WeChat on Saturday.
Despite being found in many locations globally, these widely used metals are difficult to extract and refine.
After decades of investment, China now accounts for almost the entirety of global supply, producing 92 percent of the world’s processed rare earths last year.
Because these metals are crucial for the production of military drones, electric vehicles and even medicines, China’s decision to respond to tariffs by cutting off U.S.access to some rare earths left senior administration officials scrambling to contain the economic fallout.
Although China pledged after Geneva to “suspend or remove” nontariff countermeasures taken since Trump’s “Liberation Day” tariffs were announced April 2, its officials and state media have consistently said that it cannot remove controls entirely.
That is partly because the export-control regime to limit the sale of “strategic minerals” with military applications was formally announced in December, before Trump took office, and Beijing justified it as being necessary for China’s national security.
Another complication is that the Geneva agreement did not extend to five critical minerals originally made subject to export restrictions in February.
They were part of China’s response to Trump’s initial 10 percent tariffs, imposed to urge Beijing to do more to curb the flow of fentanyl and its precursor chemicals into the U.S.
It is unlikely Beijing will be willing to let American companies skip an approval process that can take six weeks even for non-American companies, said Cory Combs, an analyst at Trivium China, a consultancy that advises international businesses on Chinese policy.
The Chinese bureaucrats in charge of approvals have plenty of incentives to take their time: Rare earths are ubiquitous in weaponry made by American defense contractors, many of which have been penalized by China over arms sales to Taiwan, the island democracy that Beijing claims as its territory.
“No official wants to be the one responsible for accidentally letting something go to an unapproved end user,” Combs said.
The two sides clashed over Taiwan again over the weekend after Defense Secretary Pete Hegseth stated at a regional security forum that China posed a potentially “imminent” military threat to Taiwan.China’s Ministry of Defense responded Sunday that his remarks were “irresponsible” and reflected the a “bullying style and Cold War mentality.”
With rising tensions threatening to undermine the trade war truce, administration officials appear to be hoping that a conversation between Trump and Chinese leader Xi Jinping can put talks back on track.
Bessent said that the two leaders planned to speak “very soon” while National Economic Council Director Kevin Hassett said a call could happen as soon as this week.The administration was “focused 100 percent like a laser beam on the China matter, to make sure that there are no supply disruptions because these licenses are coming a little slower than we would like,” he told ABC.
Beijing has not commented on the possibility of a call or confirmed it is under discussion.Experts on Chinese foreign policy consider it unlikely that Xi would agree to a conversation during such a delicate moment in talks.
While the U.S.
has grown impatient and pushed for a Xi-Trump call, “the Chinese tradition is that you work out 95 percent of the agreement at the working level and then the leaders will come in to seal the deal,” said Wang Dong, an international relations professor at Peking University in Beijing.
Trump’s New York real estate-style dealmaking, where the two big bosses sit down and hammer out an agreement, doesn’t work well with China, Wang said.
Lyric Li contributed to this report..
