China says U.S. violated tariff truce as trade war heats up

China on Monday said the Trump administration is undermining the temporary May 12 trade agreement between the two nations by issuing AI chip export control guidelines, stopping the sale of chip design software to China and by planning to revoke Chinese student visas.

The Trump administration's actions "seriously undermine the existing consensus reached at the Geneva economic and trade talks, and seriously damage China's legitimate rights and interests," China's Commerce Ministry said in the June 2 statement.

China's claims come after President Trump on Friday said that Beijing is violating a trade agreement with the U.S., just weeks after the two countries announced on May 12 a temporary but significant easing of tariffs imposed on each other's imports earlier in the year. The escalation of rhetoric heightens concerns that the two largest global economies may encounter further stumbling blocks as they pursue trade negotiations, experts say.

"Fresh hostilities between the U.S. and China show that the many questions left hanging after the Geneva ceasefire in mid-May still have no satisfactory answers," Arthur Kroeber, a China analyst at Gavekal Research, said in a report. "It is not clear whether U.S. trade policy is being run by President Donald Trump, his trade negotiators or his national security team."

He added, "The overall objectives of the trade aggression, other than the display of raw power, are as muddled as ever."

Meanwhile, Treasury Secretary Scott Bessent on Sunday said he's "confident" a U.S.-China trade dispute "will be ironed out" when Mr. Trump and Chinese President Xi Jinping have a conversation. "I believe we'll see something very soon," Bessent said on "Face the Nation with Margaret Brennan."

Wall Street was lower on Monday amid renewed concerns of a brewing trade war between the nations. The S&P 500 slipped 10 points, or 0.2%, to 5,901, while the Dow Jones Industrial Average fell 0.4% and the tech-heavy Nasdaq composite shed 0.1%.

The May 12 deal lasts 90 days, creating time for U.S. and Chinese negotiators to reach a more substantive agreement. But the pause still leaves tariffs higher than before Trump started ramping them up last month. Businesses and investors must also contend with uncertainty about whether the truce will last.

U.S. Trade Representative Jamieson Greer said the U.S. agreed to drop the 145% tax Mr. Trump had imposed on China to 30%. China agreed to lower its tariff rate on U.S. goods to 10% from 125%.

On Monday, the Commerce Ministry said China held up its end of the deal, canceling or suspending tariffs and nontariff measures taken against the U.S. "reciprocal tariffs" following the agreement. But it alleged that the Trump administration has "unilaterally provoked new economic and trade frictions and exacerbated the uncertainty and instability" in trade relations between the two nations, citing curbs on exports of AI chips and chip design software to China.

The statement also singled out the Trump administration's threat of stripping visas away from Chinese students studying at U.S. universities as undermining the trade agreement between the nations.

The Trump administration stepped up the clash with China last week, announcing that it would start revoking visas for Chinese students in the U.S. American campuses host more than 275,000 students from China.

The turmoil between the U.S. and China raises economic risks, given the links between the two nations and their importance in global trade, experts added.

"If the United States and China were to disengage completely in another blitz of escalating tariffs, it would be a really big deal for the global economy," Carl Weinberg, chief economist at High Frequency Economics, told investors in a client note. "Demand for industrial commodities would plummet. Supply chains spanning multiple borders would shut down."

The Associated Press contributed to this report.

• Trump Administration
• China