New Delhi: China has publicly accused the United States of sabotaging a newly inked trade agreement, calling Washington’s recent export restrictions a “blatant betrayal”. Just weeks after both superpowers agreed to a fragile tariff ceasefire in Switzerland, the brewing fallout is now spiraling into a diplomatic standoff with serious global consequences.
At the heart of the storm are AI, advanced chips and a sudden clampdown on Chinese students in the United States.
China’s Ministry of Commerce blasted the United States for undermining the agreement signed in Switzerland last month. It claimed that America had not only violated terms by restricting AI chip exports and design software but also gone as far as revoking student visas without warning.
“This is not diplomacy, it is economic warfare. If the United States continues down this path, China will not sit idle. We will defend our interests with forceful and resolute measures,” said a ministry spokesperson said through state media.
What’s Really Going On?
While the agreement initially paused tariff hikes for 90 days to make room for negotiations, Washington has moved swiftly to restrict China’s access to technologies vital for AI advancement, a decision seen as strategic and deeply provocative.
Analysts believe these moves are intended to choke China’s ambitions in semiconductors and artificial intelligence and industries Beijing views as essential to its future dominance.
The White House, in response, doubled down. Spokesperson Karoline Leavitt defended the restrictions and said President Trump is “onshoring vital supply chains” and pushing back against China’s “manipulative trade practices”.
Secretary of the Treasury Scott Bessent added fuel to the fire on CBS’ Face the Nation, accusing Beijing of intentionally stalling exports of critical minerals needed for U.S. industries like defense and electronics.
“Maybe it is sabotage. Maybe it is incompetence. Either way, the President will deal with it directly with Xi,” Bessent said.
The collapse of this deal could send shockwaves through global markets, from rare earth prices to auto manufacturing delays. It could even jeopardise thousands of Chinese students currently studying in the United States.
Some insiders worry this clash could mark the beginning of an unofficial economic Cold War, with AI, chips and even academic visas becoming weapons in a tit-for-tat battle for dominance.