US-China trade tensions flare as Beijing accuses Washington of breaching deal

Tensions between the United States and China have escalated once again as Beijing accuses Washington of breaching a recent trade agreement.

The Chinese Ministry of Commerce issued a statement condemning the US’s actions, signalling a potential setback in ongoing efforts to stabilise bilateral trade relations.

China’s accusation

According to a report by Bloomberg, China has accused the United States of “seriously violating” the trade truce established in Geneva in May 2025.

The Chinese Ministry of Commerce criticised the US for introducing new trade and technology restrictions, including export controls on artificial intelligence (AI) chips, curbs on chip design software sales to China, and the revocation of Chinese student visas.

Beijing said these actions undermined the consensus reached between President Donald Trump and President Xi Jinping during their last conversation in January.

“If the US insists on its own way and continues to damage China’s interests, China will continue to take resolute and forceful measures to safeguard its legitimate rights and interests,” the ministry stated, as quoted by Bloomberg.

The ministry further stated it “resolutely rejects these unjustified accusations” and insisted that China has strictly implemented the Geneva consensus.

China-US trade truce under pressure

The US-China trade relationship has remained turbulent in recent years. In early 2025, President Trump imposed a sweeping 145 per cent tariff on Chinese imports, citing trade imbalances and national security concerns.

China responded with retaliatory tariffs of up to 125 per cent on US goods.

A temporary easing of tensions came in May, when both countries agreed to scale back certain tariffs during talks in Geneva.

However, Washington’s latest actions—including export bans, software curbs, and visa restrictions—have sparked renewed conflict.

Last week, the Trump administration said it planned to start revoking visas for Chinese students, while moving to restrict sales of chip design software to China.

According to the New York Times, the US has also barred exports of critical jet engine parts and aviation technology to China.

Although Trump did not provide specifics when accusing Beijing of violating the trade truce on Friday, US Trade Representative Jamieson Greer said China had failed to accelerate exports of critical minerals used in advanced electronics, as per Bloomberg .

According to Bloomberg, the US Treasury Secretary Scott Bessent confirmed that trade talks had stalled and hinted that a direct call between Trump and Xi might be necessary to break the deadlock.

Trump has recently reportedly voiced dissatisfaction with Beijing’s pace in fulfilling agreed commitments, particularly in boosting exports of critical minerals essential to the US tech and defence sectors.

Impact on the Chinese Economy

The ongoing trade tensions have had a tangible impact on China’s economy.

Despite setting an ambitious GDP growth target of around 5% for 2025, analysts reportedly remain skeptical about China’s ability to achieve this goal amid external pressures.

The International Monetary Fund (IMF) projects China’s economy will grow by 4.6% in 2025, down from 5% in 2024.

Furthermore, China’s fiscal deficit target for 2025 has been set at approximately 4% of GDP, the highest level in over three decades, indicating increased public spending to support growth, according to Reuters.

The Economist Intelligence Unit anticipates a 20% reduction in China’s exports to the U.S. over 2025-27, with the majority of the impact being felt in 2026.

This contraction is expected to reduce GDP growth by 0.6 percentage points over the same period.

What lies ahead?

As both countries harden their trade stances, the path forward remains uncertain.

The risk of further escalation is real, but diplomatic backchannels could still pave the way for renewed dialogue between Trump and Xi.

With global markets, supply chains, and developing economies exposed to fallout from any US-China fallout, the world is closely watching how the next chapter of this economic standoff unfolds.