Although China and the United States reached a 90-day truce on tariffs during talks in Geneva on May 12, trade negotiations between the two countries are still ongoing. As many observers have noted, deep-rooted and structural differences between the two sides continue to cast a shadow over the prospects for any meaningful agreement.
On May 29, U.S. Treasury Secretary Bessent told reporters that trade talks with China had stalled. He suggested that a phone call between the two leaders might be necessary to break the deadlock. That same morning, President Donald Trump took to social media to accuse China of failing to honor his goodwill and having “totally violated its agreement with us.” Trump indicated he was very frustrated, writing “So much for being Mr. Nice Guy!”
As talks have hit a wall, the Trump administration has taken several steps outside the negotiating table to increase pressure on Beijing. These include tightening restrictions on tech exports to China and stepping up scrutiny of Chinese students applying for U.S. visas. While these measures are in line with Trump’s hardline stance on China, they also appear to be calculated moves aimed at boosting the United States’ leverage at the negotiating table.
In response, China may consider countermeasures such as restricting rare earth exports or strengthening ties with the European Union to push back against U.S. pressure and expand its own diplomatic room to maneuver.
Uncertainty and Friction Hang Over China-U.S. Trade Talks
The United States and China face deep-rooted, structural conflicts over trade issues such as currency manipulation, export subsidies, and other non-tariff barriers. Any negotiations between them are inherently difficult, and the outlook is far from optimistic.
A similar breakdown happened during Trump’s first term. In May 2019, just as the two sides appeared close to a deal, talks collapsed. The Office of the U.S. Trade Representative accused China of backtracking on previously agreed commitments by removing key pledges from a nearly 150-page draft agreement, including chapters on intellectual property protection, forced technology transfers, and unfair trade practices such as export subsidies. For Beijing, these were red-line issues tied to national sovereignty, and it refused to concede.
Despite facing a slowing domestic economy, China’s leaders believe that Trump is under greater pressure than they are. The high tariffs on Chinese goods have disrupted U.S. supply chains, pushed up prices, shaken the stock market, and could potentially hurt Republican chances in the midterm elections. As a result, Chinese officials feel they have more bargaining power and are less willing to compromise on core issues.
At the same time, Trump has been eager to show strength in the trade talks and avoid any appearance of backing down. For instance, when asked recently by a reporter whether he had “chickened out” in negotiations with China, Trump grew visibly angry – revealing just how sensitive he is to any suggestion of weakness.
Pressure Tactics Unleashed: U.S. Uses Tech and Visa Leverage
The Trump administration has recently rolled out a series of new export control measures targeting China. While these moves are officially justified on national security grounds, it’s clear that they also serve as a strategic tool to pressure Beijing and gain leverage in ongoing trade negotiations.
On May 29, the administration announced a halt on the sale of certain critical U.S. technologies to China, including those related to jet engines, semiconductors, and specific chemicals.
For example, the U.S. Department of Commerce suspended licenses that had allowed American companies to sell key products and technologies to China’s state-owned aircraft manufacturer, COMAC, for the development of its C919 passenger jet. The C919, a narrow-body aircraft comparable in size to the Boeing 737 and Airbus A320, carried its first paying passengers in 2023. Many of its core components – such as jet engines and systems for power and flight control – are supplied by companies in the United States and Europe. Banning the sale of jet engines to China could seriously disrupt the production of the C919, which remains heavily reliant on American-made engines, including those from General Electric.
In addition, the Trump administration is moving to block China’s access to advanced semiconductor design tools. U.S. companies that provide electronic design automation (EDA) software – including Synopsys, Cadence, and Siemens EDA – have been ordered to stop selling their services to Chinese firms. While EDA tools make up a relatively small segment of the semiconductor industry, they are critical for designing and testing next-generation chips. Without these tools, often referred to as the “mother of chips,” it becomes extremely difficult to advance chip development.
Limiting China’s access to EDA software is expected to deal a major blow to its domestic chip design sector, which remains highly dependent on U.S. technology. Synopsys, Cadence, and Siemens collectively hold more than 70 percent of the EDA market share in China.
Beyond technology, the Trump administration has also targeted Chinese students enrolled at American universities. It announced plans to revoke the visas of students with links to the Chinese Communist Party or those studying in “critical fields,” a term that has not been defined. This move has sparked widespread concern among the more than 270,000 Chinese students currently studying in the United States.
China is the second-largest source of international students in the U.S. after India. China’s technological progress since its reform and opening-up has been deeply tied to educational and talent exchanges with developed Western countries, such as the U.S. Given that the Chinese Communist Party has over 90 million members, and that many Chinese students have family members or relatives with some form of connection to the party, such a broad and loosely defined standard for denying or revoking student visas would undoubtedly have a serious impact on China-U.S. educational exchanges.
How Might China Respond to the Latest U.S. Measures?
Since the 90-day tariff truce was reached between China and the United States in Geneva, Switzerland, Beijing has been sending signals of de-escalation. On May 14, China announced a 90-day suspension of export restrictions on 28 U.S. entities, covering rare earth elements and other items with potential military applications. At the same time, China’s Ministry of Commerce declared a parallel 90-day pause on trade and investment bans affecting 17 American companies. Both moves were widely interpreted as gestures of goodwill and a desire to ease tensions.
However, in light of Washington’s recent escalation – tightening export controls on advanced technologies and threatening to revoke the visas of Chinese students – Beijing is likely to reinstate rare earth export restrictions to the U.S. China dominates the global rare earth supply chain, producing 60 percent of the world’s supply and handling 90 percent of processing. It may also resume trade and investment bans on select American firms as a form of reciprocal retaliation.
Additionally, facing continued pressure on its semiconductor sector, China is actively seeking to partner with Europe to mitigate the effects of U.S. sanctions. On May 27, China’s Ministry of Commerce hosted a roundtable with upstream and downstream players in the China-EU semiconductor supply chain, briefing them on the country’s rare earth export control policies. The aim was to enhance communication and coordination between the Chinese government and European chip firms.
This move suggests that China may ease rare earth export restrictions on European companies, signaling a “unite with Europe to counter the U.S.” strategy. By deepening cooperation with Europe in semiconductor supply chains, Beijing hopes to weaken Washington’s efforts to isolate China technologically.
Moreover, China may also mobilize U.S. businesses with significant commercial interests in the Chinese market to apply indirect pressure on the Trump administration. American firms, caught between both sides, could serve as a moderating force in the ongoing tensions. For example, American EDA software companies such as Synopsys and Cadence have substantial commercial interests in China, where they hold a significant share of the market. The U.S. Department of Commerce’s decision to halt the sale of jet engines to China could also lead to breaches of existing procurement contracts, potentially resulting in economic losses for the American companies involved.
Overall, in the face of prolonged economic headwinds, the Chinese leadership appears to view the U.S.-led tariff war as an opportunity to redirect domestic frustration. On one hand, it can stoke nationalist sentiment and deflect blame for the country’s economic slowdown. On the other, by applying external pressure, China may also slow the momentum of the currently strong U.S. economy – disrupting supply chains, raising prices, shaking markets, and possibly influencing the Republican Party’s performance in the upcoming midterm elections. In this sense, China’s strategy aims to “kill three birds with one stone.”
Given this perspective, Beijing is likely to remain calm and resolute, not retreating, but biding its time and playing the long game.