The fragile trade truce between the United States and China is showing signs of deterioration just over a week after markets rallied on a temporary pause of tariffs between the two economic powers.
On Wednesday, China’s Commerce Ministry announced it would pursue legal action against any individuals or organizations aiding the US in efforts to discourage the use of China’s advanced semiconductor technology.
This statement followed a warning from the US Commerce Department, which initially declared that using Huawei chips worldwide would violate US export controls, though the reference was subsequently removed.
These developments cloud the outlook for the 90-day tariff pause, shifting attention to broader trade negotiations. The reciprocal tariffs have already deeply impacted commerce: Chinese exports of Apple’s iPhones and mobile devices to the US fell to their lowest levels since 2011 in April.
Meanwhile, the Port of Los Angeles, America’s busiest container port, experienced shipment declines of up to 30% in early May, a direct consequence of the tariffs. Importers and retailers connected to China have been hit especially hard.
Business leaders continue to voice concerns over the tariffs’ early effects. JPMorgan CEO Jamie Dimon recently warned that markets are underestimating the tariffs’ long-term damage, describing the duties as “pretty extreme.” Citigroup CEO Jane Fraser echoed this sentiment, highlighting that companies are postponing investments amid ongoing tariff uncertainty.
Last week, Walmart forecasted upcoming price increases, prompting a sharp response from President Trump, who told the retailer to “eat the tariffs.”
Tensions have escalated as the Trump administration stepped up its rhetoric. Treasury Secretary Scott Bessent stated Sunday that tariff rates would revert to previous “reciprocal” levels if trading partners fail to secure deals within the 90-day window.
“President Trump has put them on notice that if you do not negotiate in good faith, tariffs will ratchet back up to your April 2 level,” Bessent told CNN, identifying 18 key partners prioritized in US trade talks.
On Friday, Trump indicated the US will finalize tariff rates for trading partners in the coming weeks, noting the administration’s limited capacity prevents simultaneous negotiations with all countries.
