Why the U.S. Accused China of Breaking the Geneva Deal—and How China Responded

Disagreements over "non-tariff countermeasures"

Right after the U.S. and China just hit pause on their tariff war in Geneva, it’s caught many off guard that Washington has been rolling out a flurry of new tech restrictions on China.

One possible explanation? The U.S. government is full of different factions, and the hawks pushing these restrictions probably weren’t thinking about the ongoing trade talks. Another possibility is that something recently triggered U.S. frustration toward China, and they’ve responded by ramping up pressure.

There’ve been a few signals worth noting. First, Treasury Secretary Scott Bessent said the trade negotiations are a bit “stalled.” Then Trump suddenly posted that China had “totally violated” the Geneva agreement, though he didn’t explain what exactly China had done wrong.

But U.S. Trade Representative Jamieson Greer gave a bit more context in a CNBC interview last week. He pointed out that while the U.S. had dropped tariffs, China was being slow when it came to loosening its rare earth export controls.

According to the official U.S.-China joint statement from the Geneva talks, China agreed to two things by May 14:

1. Adjust certain tariffs on U.S. goods — specifically, suspend a 24% tariff for 90 days, keep a 10% one, and cancel a few others.

2. Suspend or cancel all non-tariff countermeasures against the U.S. that were introduced after April 2.

Since China already delivered on the first part, Trump’s claim of “violating the deal” must refer to part two — the non-tariff countermeasures.

Here’s what China did post–April 2:

• April 4: China’s Ministry of Commerce (MOFCOM) and Customs issued new export controls on seven types of medium-to-heavy rare earth materials (like samarium, gadolinium, terbium, dysprosium, lutetium, scandium, yttrium).

• April 4 & 9: MOFCOM added 28 U.S. entities to its export control list and 17 more to its unreliable entities list — those restrictions were lifted on May 14.

So now, the only unresolved issue is the rare earth export controls. And it looks like Beijing and Washington understand that part of the Geneva deal very differently.

Today, China’s Ministry of Commerce responded to the U.S. accusations that China “violated the Geneva agreement.” A Chinese legal expert on trade also weighed in.

From the Chinese side, the argument might be: rare earth controls aren’t specifically against the U.S., but are part of China’s broader sovereign right to manage its strategic resources. The measures against the 28 and 17 U.S. entities were the only direct non-tariff countermeasures, and those have already been lifted.

In China’s view, rare earth exports are subject to a license-based system that applies to everyone, not just the U.S. — very different from how the U.S. bans high-tech exports to China. As long as China is still reviewing U.S. applications and issuing licenses where appropriate, they believe they’re fulfilling the agreement.

But then, on the day after the May 12 joint statement, the U.S. Commerce Department issued three new tech-related guidances — including one saying that using Huawei Ascend chips “anywhere in the world” violates U.S. export control rules. By the end of May, U.S. media reported that the government had also suspended export licenses for aircraft engines bound for China and was planning new restrictions on chip design software (EDA).

China saw this as a triple violation — “a serious breach of the two leaders’ Jan. 17 consensus, a serious blow to the Geneva trade talks, and a serious infringement on China’s legitimate rights”. Three "serious" warnings in official statements — that’s how angry Beijing is.

What might’ve happened is: during the Geneva talks, China probably raised the issue of tech controls. The U.S. likely said export controls are non-negotiable — because they’re national security matters. China didn’t push further, and instead agreed to suspend its non-tariff countermeasures. But clearly, both sides were in a rush to wrap things up, get a good headline, and calm markets. So some tough issues — like rare earths and what’s "allowed" post-agreement — were probably left vague.

Now we have two key questions:

1. How much flexibility does China have on rare earth export controls before it’s seen as breaching the agreement? The U.S. probably expects China to fully lift the April 4 export restrictions or at least issue licenses quickly. But China likely sees it differently: managing rare earths is a matter of national sovereignty, just like how the U.S. justifies its semiconductor bans. China promised not to ban rare earth exports to the U.S., but still has the right to require license applications and review them on a case-by-case basis.

2. Can the U.S. still roll out new tech controls against China after Geneva? The U.S. likely views trade talks and tech controls as separate. The three guidances on Huawei are seen as clarifications to existing chip export control rules, not new sanctions. Still, it’s clear not everyone in the U.S. government was on the same page — some officials worried new tech restrictions would derail the negotiations. And maybe they were right — China did respond with strong protests through trade channels.

Interestingly, the U.S. Commerce Department later quietly revised the wording on its Huawei guidance, changing it from “using Ascend chips violates U.S. export controls” to “warning of the risk” when using advanced Chinese chips. In China, that prompted two different reactions:

• Some saw it as the U.S. backing off — since the language softened;

• Others saw it as the opposite — saying the change broadens the warning to include all advanced Chinese chips, like those from Cambricon, not just Huawei. The Chinese government clearly leans toward the second view. MOFCOM said that while the press release was revised, the guidance itself and its discriminatory nature remain unchanged.

From Beijing’s perspective, the U.S. was the one that broke the spirit of the Geneva agreement first. So now China feels justified in pushing back — and that may be why U.S. officials are complaining about rare earth license delays. But it could still be another story too, as Michael Hart, head of AmCham China, said, “Some of the delay is related to China working through their new system to approve exports, not that they are not allowing exports.” Still, Washington likely sees the delays as deliberate. U.S. business groups — especially in the auto and energy sectors — have complained to the White House that they can’t get key rare earths approved, and that’s adding to the tension.

On the Chinese side, it seems they have their own frustration, too. The Chinese legal expert added, “The joint statement didn’t include a 'standstill clause' — there’s no ban on new restrictions. If the U.S. keeps adding export controls, China reserves the right to respond in kind.”

At this point, the two working-level teams seem to be at an impasse. Maybe the most straightforward way forward is… another call between the two Presidents.