China Accuses U.S. of Violating Trade Truce Amid AI Chip Export Restrictions

On June 2, 2025, China accused the United States of violating a recently established trade truce and pledged to take "resolute and forceful measures" in response. This accusation follows the U.S. imposing new restrictions on artificial intelligence (AI) chip exports, halting sales of chip design software to China, and announcing plans to revoke Chinese student visas. These actions, according to China's Commerce Ministry, breach the consensus reached between the two nations to reduce tariffs and improve trade relations.

In May 2025, the United States and China reached a temporary 90-day agreement aimed at de-escalating trade tensions. This truce involved both nations reducing certain tariffs:

• United States: Reduced tariffs on Chinese goods from 145% to 30%.
• China: Lowered tariffs on U.S. goods from 125% to 10%.

The agreement was intended to provide a window for further negotiations and to stabilize bilateral trade relations.

The United States implemented several measures that China views as violations of the trade truce:

1. AI Chip Export Restrictions: The U.S. imposed new restrictions on the export of advanced AI chips to China, aiming to curb China's access to critical semiconductor technology.

2. Halting Sales of Chip Design Software: The U.S. halted the sale of chip design software to Chinese companies, further limiting China's ability to develop advanced semiconductors.

3. Revocation of Chinese Student Visas: The U.S. announced plans to revoke visas for Chinese students, particularly those studying in critical fields, citing national security concerns.

China's Commerce Ministry condemned these U.S. actions, stating they "seriously violate" the trade truce and disrupt bilateral trade stability. The Ministry accused the U.S. of unilaterally triggering new trade conflicts and warned of firm retaliatory steps to protect its interests.

The escalating trade dispute has had immediate effects on global markets:

• U.S. Dollar: The dollar neared a three-year low, declining by 0.6% against a basket of trade partner currencies, amid concerns over weak U.S. manufacturing data and rising national debt.
• Stock Markets: Financial markets experienced downturns, with indices like the Hang Seng and Nikkei affected by the uncertainty surrounding U.S.-China trade relations.
• Semiconductor Industry: Companies like Synopsys suspended their financial forecasts due to the new U.S. export restrictions, highlighting the broader impact on the tech industry.

This is not the first instance of escalating trade tensions between the U.S. and China. Previous disputes have similarly involved tariffs, export controls, and accusations of unfair trade practices. However, the current focus on advanced technologies like AI and semiconductors marks a significant shift, reflecting the strategic importance of these sectors.

The recent accusations and countermeasures between the United States and China underscore the fragile nature of their trade relations. As both nations navigate the complexities of economic competition and national security concerns, the global community remains attentive to the potential ramifications on international trade and economic stability.