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Tensions Resurface in U.S.-China Trade Negotiations

Trade negotiations between the United States and China have reached an impasse, according to U.S. Treasury Secretary Scott Bessent. In a recent interview with Fox News, Bessent described the current status of talks as “a bit stalled,” emphasizing that meaningful progress may require direct engagement between President Donald Trump and Chinese President Xi Jinping.

“Given the scale and complexity of the issues on the table, I think it’s going to require leadership-level intervention,” Bessent stated, pointing to the historically strong rapport between the two leaders.

Background: From Escalation to Switzerland Breakthrough

The two global superpowers, which collectively represent over 40% of global GDP, found themselves in renewed conflict last month when a series of tit-for-tat tariff hikes and technology export restrictions escalated tensions rapidly. In response, both sides sent top negotiators to Switzerland, where on May 12, they agreed to pause new tariff measures for 90 days—a deal that temporarily rolled back increases exceeding 100%.

This temporary truce expires in mid-August, putting pressure on both sides to find long-term solutions.

Current Sticking Points: Tech and Rare Earths

While the Geneva agreement offered a reprieve, sticking points remain unresolved:

• U.S. Tech Sanctions: Washington has continued to tighten restrictions on technology exports to China, particularly in areas like advanced semiconductors, artificial intelligence, and quantum computing.
• Chinese Rare Earths Policy: Beijing has not reciprocated with easing its controls on rare earth elements—materials vital to electronics, defense, and green technologies.

According to the U.S. Geological Survey, China produces over 70% of the world’s rare earths, making its export policy a critical lever in geopolitical negotiations.

Calls for Direct Dialogue Between Trump and Xi

Secretary Bessent suggested that a phone call or direct meeting between Trump and Xi may occur in the coming weeks. The two last spoke in January 2025, just prior to Trump’s second inauguration. However, Chinese officials are reportedly hesitant to commit to a call unless there’s assurance that the U.S. won’t introduce unexpected measures during or after the discussion.

“The Chinese will engage seriously when they know President Trump is personally involved,” Bessent remarked. “His signals carry weight in Beijing.”

China Responds: Cautious Optimism, Tough Rhetoric

During a press briefing on Thursday, He Yongqian, spokesperson for China’s Ministry of Commerce, affirmed that communication channels remain open since the May agreement.

However, she pushed back strongly on U.S. actions:

“China again urges the U.S. to immediately correct its wrong practices and work with us to uphold the consensus achieved in Geneva,” He said, according to a CNBC translation of her remarks.

When pressed about whether China would lift its export restrictions on rare earths—announced in early April—He declined to give a definitive answer, stating only that the controls are aligned with international norms and aimed at “regional stability.”

New Tensions: Student Visas Now in the Crosshairs

This week, the Trump administration added another flashpoint by announcing a plan to revoke visas for hundreds of Chinese graduate students in STEM fields, citing national security concerns.

China’s Foreign Ministry condemned the move as politically motivated:

“The U.S. decision is fully unjustified,” said spokesperson Mao Ning. “It weaponizes ideology and national security under false pretenses.”

Over 300,000 Chinese students were enrolled in U.S. universities as of 2024, contributing nearly $15 billion annually to the U.S. economy, according to the Institute of International Education. Analysts warn that such moves risk deepening mistrust and undermining broader diplomatic efforts.

What Comes Next?

Analysts expect high-level discussions to resume soon—possibly after preliminary groundwork is completed by diplomats from both sides. But there is widespread agreement that real breakthroughs hinge on a renewed personal engagement between Trump and Xi.

The clock is ticking, with the 90-day trade pause halfway through and tensions mounting across multiple fronts—from tariffs and tech to students and supply chains.

For now, markets, manufacturers, and policy watchers alike will be monitoring not just policies—but personalities. And whether the two most powerful leaders on the planet are ready to step in.