In a stark turn of events, US President Donald Trump has accused China of “totally violating” the Geneva trade agreement. The May 12 deal, which slashed US tariffs on Chinese imports from 145 per cent to 30 per cent and Chinese tariffs on US goods from 125 per cent to 10 per cent, was touted by Trump as a triumph of American diplomacy.
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Within weeks, however, Trump reversed course, his administration accusing China of failing to resume rare earth exports as promised. Beijing vehemently denies any breach of the Geneva consensus. This erratic shift highlights the fragility of US-China negotiations and signals a new era of entrenched confrontation, with tensions spilling into technology, education and defence.
Trump’s initial gambit – framing the Geneva pact as a magnanimous rescue for China’s “collapsing” economy – quickly unravelled. His assertion that China reneged on the Geneva commitments ignored a hard truth: Beijing holds unmatched leverage over minerals critical to industries from renewable energy to consumer electronics.
US businesses, still grappling with inflation and supply chain fragility, face existential risks if China’s retaliation continues. Trump’s abrupt pivot – from bully to victim – masks a deeper reality: America’s economic vulnerabilities leave it with few credible carrots or sticks.
Even as Trump claimed victory, his administration escalated hostilities. Days after the Geneva agreement, the US imposed sweeping export controls on advanced chip-design software, including on companies like Cadence Design Systems and Synopsys. These restrictions aim to cripple China’s semiconductor sector and undercut the deal’s spirit of reciprocity.
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Worse, the US announced that any use of Huawei Ascend artificial intelligence (AI) chips could trigger criminal penalties under its export control laws, prohibiting any company – foreign or domestic – from distributing or licensing Huawei’s proprietary technology. Violators face severe penalties, including imprisonment and revoked export licences.