The fragile US-China truce on tariffs is under threat, with both sides now accusing each other of violating the terms of the ‘reset’ agreement reached in May.
On Friday (30 May), US president Donald Trump said on social media that China had “TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY.”
The Wall Street Journal reported that US officials were growing frustrated over alleged Chinese ‘slow walking’ of licences for critical minerals exporters.
A spokesperson for China's Ministry of Commerce said that Washington had “seriously undermined” the agreement.
“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.”
Not a ‘reliable partner’
US treasury secretary, Scott Bessent, clarified on CBS’s ‘Face the Nation’ programme on Sunday that:
“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.”
However, he talked up the possibility that this latest flare up could be “ironed out” with a call between Trump and Chinese president Xi Jinping.
The two sides had reached a deal temporarily reducing the tariffs for 90 days. US imports into China still face a 10% tariff, with a 30% rate applying to Chinese exports the other way.
These numbers were down from 125% and 145%, respectively, following “substantial progress” during talks in Geneva.
‘Reset’ to ‘TACO’
At the time, Trump hailed the deal as a “total reset” of China-US relations.
In questioning at the White House, Trump appeared to respond poorly to a question referring to a social media phrase ‘TACO’, which stands for Trump Always Chickens Out, calling the question “nasty”.
The comments had circulated on social media after multiple Trump climbdowns following a market backlash. Guardian journalist Jasper Jolly raised the issue of whether this will “needle” the US president into taking a harder line.
Body blow threatened for UK steel
Also on Friday (30 May) Trump posted on his social media account that:
“It is my great honor to raise the Tariffs on steel and aluminum [sic] from 25% to 50%, effective Wednesday, 4 June.”
Although major parts of Trump’s tariff agenda were struck down by a court last week, this decision did not impact his ability to apply measures to steel exports.
At a rally in Pittsburgh, Pennsylvania, on the same day, Trump said that the move would boost the local steel industry.
A UK government source told Sky News that the UK would be exempt from this new tariff rate, following the UK-US Economic Prosperity Deal (EPD) signed a few weeks ago.
Gareth Stace, director-general of the UK Steel trade body, described it as a “body blow” for the industry.
“Uncertainty remains as to whether and when our second-biggest export market will be open for business or is being firmly shut in our faces,” he said
The business and trade secretary, Jonathan Reynolds, is expected to urge the White House to quickly put in place the trade deal, in meetings with his US counterpart, Jamieson Greer.
