U.S. Pres. Donald Trump accused China of backtracking on terms of an initial trade deal, raising tensions between the two countries to the breaking point. A post to social media a day later confirmed this announcement was true. It came on the heels of Treasury Secretary Scott Bessent’s statement on stalled trade talks with China. The persistent US-China trade war has led each country to impose tariffs on $550 billion in imports from the other, worrying economists about broader economic effects.
On May 12, the U.S. and China took an important joint step. They committed to a 90-day suspension of most new tariffs levied on each other’s goods. This deal was meant to encourage discussion and collaboration between the two increasingly separate economic engines. The good news on the recent developments introduces the possibility that a full-blown trade deal might be more murky than first expected.
In reality, Trump’s comments on China’s purported extortive actions are creating quite a bit of controversy. On Friday, morning stock futures sank as investors worried that a preliminary trade agreement between the U.S. and China may fall apart. The President’s accusation is born of the growing frustration with the negotiation at a standstill. Most notably, these discussions have included Chinese President Xi Jinping but recently, Trump as well.
The heavy tariffs on imports from China amounted to a historic departure from U.S. trade policy. These tariffs were meant as punishment for trade imbalances. By doing so, they drew retaliatory measures from China, further straining the already fraught relationship. Market analysts have been quick to point out how this escalation in rhetoric from both sides would have an adverse effect increasing market volatility and uncertainty.
In Trump’s social media post, he did not specify the exact nature of China’s alleged breaches. Nevertheless, this statement is another signal of the U.S. administration’s concern about compliance with the terms negotiated during previous rounds. That initial trade agreement was supposed to be the groundwork for establishing conversations that truly mattered. It centered on intellectual property rights, trade deficits, and other such economic considerations.
As the U.S. and China continue to work through these complex negotiations, it is still unclear whether a deal can be finalized. This complicated dance of tariffs, retaliations, accusations and frozen negotiations underscores the contentious nature of global trade agreements.