China accuses US of "serious" trade truce breach, threatens firm response

China has accused the United States of "seriously violating" a trade truce between the two countries and pledged to take firm action to defend its interests, as a renewed row over critical minerals threatens to escalate tensions.

The two sides had reached a temporary agreement during talks in Geneva in early May to ease their mutual tariffs, some of which had climbed as high as 145 per cent, Caliber.Az reports, citing British media. 

Washington had hoped the deal would restore the flow of rare earths and related magnets from China to the US.

However, President Donald Trump on May 30 accused Beijing of having “totally violated” the agreement, amid growing frustration in Washington over the sluggish pace of Chinese rare earth exports following the May 12 deal.

On June 2, China's commerce ministry responded, insisting it had complied with the terms of the agreement. It accused the United States of implementing “a series of discriminatory and restrictive measures” in recent weeks, which it said undermined the Geneva consensus and damaged “China’s legitimate rights and interests”.

“If the US insists on going its own way and continues to harm China’s interests, China will continue to take strong and resolute measures to safeguard its legitimate rights,” the ministry warned.

Among the measures cited were US actions targeting Chinese technology and academia, including global warnings against the use of Huawei chips, a halt to sales of chip design software to Chinese firms, and the cancellation of visas for Chinese students.

US officials had believed the May agreement would lead to the lifting of restrictions introduced by Beijing in April on rare earth exports. However, the slow pace of licensing approvals has sparked concern in Washington.

Sources familiar with the discussions said the US had repeatedly raised the issue in private with Chinese officials since the Geneva talks and warned that it remained a top priority for the administration, with President Trump monitoring the situation closely.

According to a person with knowledge of Beijing’s position, the Chinese side had accelerated the approval of some rare earth shipments to the US, attributing earlier delays to bureaucratic bottlenecks. They suggested this move had helped prevent a complete collapse of the trade agreement.

While nearly a dozen shipments to the US had been approved, a much larger number of applications remain pending, according to a source close to the US side.

“The fact that they are withholding some of the products that they agreed to release during our agreement, maybe it’s a glitch in the Chinese system, maybe it’s intentional, we’ll see after the president speaks with the party chairman,” US Treasury Secretary Scott Bessent told CBS on June 1.

“What China is doing is they are holding back products that are essential for the industrial supply chains of India, of Europe, and that is not what a reliable partner does,” he added. Nonetheless, Bessent expressed optimism that President Trump and Chinese leader Xi Jinping could resolve the dispute during an upcoming phone conversation, which US officials said might happen this week.

China’s foreign ministry did not respond to queries regarding the possible call. The White House has previously floated the prospect of a Trump-Xi conversation without it materialising.

Michael Hart, president of the American Chamber of Commerce in China, acknowledged that while progress had been slow for US firms, some Chinese suppliers had recently been granted permission to ship rare earths to several American car manufacturers.

“It’s a new process China is working through,” he said. “We have heard there are only a handful of officials reviewing thousands of applications.”

The renewed tensions weighed on Asian financial markets. Hong Kong’s Hang Seng index slipped 0.8 per cent, while Japan’s Nikkei 225 shed 1.3 per cent. The offshore renminbi edged down 0.1 per cent to 7.21 against the US dollar. Mainland Chinese stock markets were closed for a public holiday.

By Aghakazim Guliyev