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

China has accused the Trump administration of undermining the temporary trade agreement reached on May 12 between the two nations. The Chinese Commerce Ministry stated on June 2 that the issuance of AI chip export control guidelines, halting the sale of chip design software to China, and the plan to revoke Chinese student visas are all actions that go against the agreement.

President Trump recently mentioned that Beijing is violating the trade agreement with the U.S., signaling a potential breakdown in negotiations. The trade tensions between the two countries have escalated, leading to concerns about the future of their economic relationship. Experts are unsure about the direction of U.S. trade policy and who is ultimately making the decisions.

Treasury Secretary Scott Bessent expressed optimism that the trade dispute between the U.S. and China will be resolved when President Trump and Chinese President Xi Jinping engage in a conversation. However, the uncertainty has already impacted the stock market, with the S&P 500, Dow Jones Industrial Average, and Nasdaq composite all experiencing declines.

The temporary tariff pause agreed upon on May 12 was meant to provide a 90-day window for negotiations to reach a more substantial agreement. While some tariffs were reduced, they still remain higher than before the escalation of tensions. The Commerce Ministry of China stated that they have fulfilled their end of the deal by canceling or suspending tariffs and nontariff measures against the U.S. However, they criticized the Trump administration for imposing new trade frictions, especially regarding AI chip exports and the threat of revoking Chinese student visas.

The potential fallout from a complete disengagement between the U.S. and China could have significant economic consequences globally. Supply chains would be disrupted, demand for industrial commodities would plummet, and trade relationships would be severely impacted.

In conclusion, the ongoing trade tensions between the U.S. and China continue to pose risks to the global economy. The uncertainty surrounding the future of their trade relationship underscores the importance of finding a resolution that benefits both nations.

Contributed by: Aimee Picchi, Associate Managing Editor for CBS MoneyWatch, with experience in covering business and personal finance for various national news outlets.