China’s Accusation Ratchets Up Tensions With US Again

Tensions between the world’s largest economies are ratcheting up again after the tariff thaw in May. China accused the US of violating their recent trade deal and vowed to take measures to defend its interests, dimming the prospect of an immediate leadership call — which President Donald Trump wants to have to further bilateral talks. Beijing accused the US of unilaterally introducing new discriminatory restrictions, including new guidelines on AI chip export controls, curbs on chip design software sales to China and the revocation of Chinese student visas. The dust-up threatened to upend trade relations even as Trump expressed hope Friday he will speak with Chinese President Xi Jinping, with White House economic adviser Kevin Hassett expecting a call to take place this week.

Asian shares retreated along with US stock-index futures while gold rose as tensions worsened. The greenback has already weakened this year as trade turmoil weighs on the currency, and there was more bad news for its outlook. The dollar will tumble to levels last seen during the Covid-19 pandemic by the middle of next year, hit by interest-rate cuts and slowing growth, according to predictions by Morgan Stanley.