China 'Totally Violated' Tariffs Agreement With US, Trump Says

US President Donald Trump said early on Friday (US time) that China violated the agreement it reached on tariffs with US officials in Geneva several weeks ago.

“China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr NICE GUY!,” Trump said in a post on his Truth Social platform.

Trump did not specify what China had done – or failed to do, but US Treasury Secretary Scott Bessent told Fox News on Thursday that trade talks with China were “a bit stalled” and said getting a deal over the finish line would likely need the direct involvement of President Trump and Chinese President Xi Jinping.

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Two and a half weeks after breakthrough negotiations that resulted in a temporary truce in the trade war between the world’s two biggest economies, Bessent said progress since then has been slow, but remarked that he expects more talks in the next few weeks.

The US-China agreement to dial back triple-digit tariffs for 90 days prompted a massive relief rally in global stocks.

But it did nothing to address the underlying reasons for Trump’s tariffs on Chinese goods, mainly longstanding US complaints about China’s state-dominated, export-driven economic model, leaving those issues for future talks.

Asked later on Friday in the Oval Office about the China deal, Trump said: “I’m sure that I’ll speak to President Xi, and hopefully we’ll work that out.”

China ‘slow compliance’ on rare earth licences

A US official explained a key source of Trump’s anger later, telling Reuters that China had moved slowly on promises to issue export licences for rare-earth minerals.

The deal agreed to in Geneva called for China to lift trade countermeasures such as restrictions on its exports of critical metals needed for US semiconductor, electronics and defence production.

“The Chinese are slow-rolling their compliance, which is completely unacceptable and it has to be addressed,” US Trade Representative Jamieson Greer told CNBC, without specifying how that would happen.

Indeed, Reuters reported on Friday that global auto executives had sounded the alarm on an impending shortage of rare-earths magnets from China – used in everything from windshield-wiper motors to anti-lock braking sensors – that could force the closure of car factories within weeks.

Major US stock indexes ended little changed on Friday after Trump’s complaint about China’s compliance.

Another factor in Trump’s social media post may have been his encounter with a reporter on Wednesday, who infuriated him by asking for his reaction to Wall Street’s new term for bets that he will back off from extreme tariff actions – the “TACO” trade, an acronym coined by a Financial Times columnist for “Trump Always Chickens Out.”

Trump responded by saying it was “the nastiest question.”

“I chicken out? Oh, I’ve never heard that. You mean, because I reduced China from 145% that I set, down to 100 and then to another number?” Trump said, later adding: “It’s called negotiation.”

Discontent on both sides

US actions over the past week or so suggested the White House was unhappy with several matters, such as the trade court’s decision on Wednesday to block some of the president’s tariffs – a decision overturned by an appeal court on Thursday – and how things have played out in regard to the May 12 trade deal with Beijing.

The Commerce Department said it was reviewing exports of strategic significance to China, while noting “in some cases, Commerce has suspended existing export licences or imposed additional licence requirements while the review is pending.”

The Trump Administration ordered companies to stop shipping certain products to China – such as goods related to computer chips – without a licence, and revoked licences already granted to some suppliers.

The restrictions appeared aimed at choke points to prevent China from getting products necessary for key sectors, one sources told Reuters. Products affected include design software and chemicals for semiconductors, butane and ethane, machine tools, and aviation equipment, the people said.

Many companies received letters from the Department of Commerce in recent days informing them of the new restrictions, Reuters reported on Thursday. Firms that supply electronic design automation (EDA) software for semiconductors were sent letters last Friday that licences would now be needed to ship to Chinese customers, two of the sources said.

The electronic design automation software makers included Cadence, Synopsys and Siemens EDA. The Department would review requests for licences to ship to China on a case-by-case basis, suggesting the action was not an outright ban.

Washington also began to revoke visas for Chinese students wanting to study at top universities in the US, such as Harvard.

CNN has said there were more than 270,000 Chinese students in the US in 2024 and that some come from the country’s political and business elites.

China’s foreign ministry said on Thursday it strongly opposed the “unjust” revoking of visas “under the pretext of ideology and national security.”

And Liu Pengyu, a spokesperson for China’s embassy in Washington, said China had maintained communication on trade matters with their US counterparts since the Geneva talks, but raised concerns about US export controls.

“Recently, China has repeatedly raised concerns with the US regarding its abuse of export control measures in the semiconductor sector and other related practices,” Liu said in a statement.

But a US official with knowledge of the talks told Reuters that only tariffs and Chinese non-tariff countermeasures were covered in Geneva, and that US export controls were not part of the deal.

Sluggish response on rare earth exports

The broad swathe of these US moves got analysts suspecting these developments may be linked to the countries’ trade deal.

There was uncertainty on whether Beijing had fulfilled its agreement to restore exports of rare earth elements – or may have wanted to drag its feet on restoring controls it imposed – because of the upheaval the tariff crisis caused exporters in China, given reports of mass layoffs.

Beijing finally said on Friday that it would cooperate further with other countries over its rare earth export controls as shortages put auto and semiconductor makers in Europe and India at risk of closure.

China, which controls over 90% of global processing capacity for the rare earth magnets used in everything from cars to fighter jets and home appliances, imposed restrictions in early April requiring exporters to obtain licences from Beijing.

While a handful of licences were granted, including to some Volkswagen suppliers, Indian automakers said they had received none and would have to stop production in early June, Reuters reported on Friday.

“We stand ready to strengthen dialogue and cooperation in the field of export control with relevant countries and regions and stay committed to maintaining the stability of global production and supply chains,” foreign ministry spokesperson Lin Jian said on Friday when asked about the controls.

Chinese state media reported on Wednesday that the country could relax its curbs on rare-earth exports for Chinese and European semiconductor firms after meetings between industry and the Ministry of Commerce where the issue of shortages was raised.

Meanwhile, The New York Times reported earlier this week that the US suspension of sales of critical technologies to China included parts for state-owned plane maker COMAC, in response to China’s restriction on exports of critical minerals.

Japan: Tariffs must be dropped

And finally, in related news, Japan’s top trade negotiator, Ryosei Akazawa, met with Bessent and Commerce Secretary Howard Lutnick in Washington for just over two hours on Friday, the Japanese government said in a statement. It added that the two sides would continue to talk ahead of the G7 leaders’ summit in Canada next month where Trump and Japanese Prime Minister Shigeru Ishiba are set to meet in person.

In a later briefing, Akazawa told reporters that while progress had been made in talks with the US, there was no change in Japan’s position that any deal will require the US to drop all tariffs, including those applied to autos, auto parts, aluminium and steel.

“If our requests to do that are met, we may be able to come to an agreement,” Akazawa told Japanese media gathered at the Japanese embassy in Washington. “But if that is not possible, then it will be difficult for us to agree to a deal.”