Analysis: China Expands Economic Pressure on US Under Cover of Trade Truce
While maintaining a facade of trade truce, China is rapidly expanding its economic retaliation toolkit against the US. These measures, including rare earth controls and bans on foreign chips, are seen as leverage-building ahead of the May summit between Trump and Xi.
📋 Article Processing Timeline
- 📰 Published: April 27, 2026 at 10:45
- 🔍 Collected: April 27, 2026 at 11:01 (16 min after Published)
- 🤖 AI Analyzed: April 28, 2026 at 02:21 (15h 19m after Collected)
Beijing, April 27 (Reuters) - US President Donald Trump and Chinese President Xi Jinping met last October in a summit Trump rated '12 out of 10.' The White House claimed China would 'effectively eliminate' rare earth export controls and stop retaliating against US firms. However, China's actions suggest the opposite.
A Reuters analysis shows that while Beijing has restrained public criticism of Trump, it has swiftly moved to expand economic counter-measures against Washington. Since October, China has legislated to punish foreign firms moving supply chains out of China, tightened rare earth permits, and banned foreign AI chips in state-backed data centers. It also banned US and Israeli cybersecurity software and is mulling restrictions on exporting solar manufacturing equipment to the US.
Experts believe China is no longer just being passive; it is using the truce to build a list of economic levers ahead of the May summit. Joe Mazur, a geopolitical analyst at Trivium China, said: 'China wants a broader truce, but the logic is "if you want peace, prepare for war."' The current truce, ending in November, was partly driven by China's threat to limit rare earth exports, which caused US auto supply chain shortages.
In April, China's State Council implemented two regulations granting authorities broad powers to investigate foreign entities accused of 'discriminating' against Chinese industry or enforcing 'extraterritorial jurisdiction.' Violators could face asset seizure or deportation. Michael Hart, president of the American Chamber of Commerce in China, noted that firms now face an asymmetric dilemma: China can reduce purchases from foreign firms with little impact, but foreign firms risk investigation if they try to reduce dependence on China.
Washington has also applied pressure, launching a trade probe into China's overcapacity and forced labor in March, while further tightening semiconductor export limits. Beijing responded by requiring chip plants to use at least 50% domestic equipment by late 2025 and mandating the replacement of foreign AI chips in state data centers, aimed at pushing US suppliers out of the Chinese market. As the US moves to reduce reliance on Chinese critical minerals, China is searching for new 'chips,' such as restricting advanced solar technology exports.
A Reuters analysis shows that while Beijing has restrained public criticism of Trump, it has swiftly moved to expand economic counter-measures against Washington. Since October, China has legislated to punish foreign firms moving supply chains out of China, tightened rare earth permits, and banned foreign AI chips in state-backed data centers. It also banned US and Israeli cybersecurity software and is mulling restrictions on exporting solar manufacturing equipment to the US.
Experts believe China is no longer just being passive; it is using the truce to build a list of economic levers ahead of the May summit. Joe Mazur, a geopolitical analyst at Trivium China, said: 'China wants a broader truce, but the logic is "if you want peace, prepare for war."' The current truce, ending in November, was partly driven by China's threat to limit rare earth exports, which caused US auto supply chain shortages.
In April, China's State Council implemented two regulations granting authorities broad powers to investigate foreign entities accused of 'discriminating' against Chinese industry or enforcing 'extraterritorial jurisdiction.' Violators could face asset seizure or deportation. Michael Hart, president of the American Chamber of Commerce in China, noted that firms now face an asymmetric dilemma: China can reduce purchases from foreign firms with little impact, but foreign firms risk investigation if they try to reduce dependence on China.
Washington has also applied pressure, launching a trade probe into China's overcapacity and forced labor in March, while further tightening semiconductor export limits. Beijing responded by requiring chip plants to use at least 50% domestic equipment by late 2025 and mandating the replacement of foreign AI chips in state data centers, aimed at pushing US suppliers out of the Chinese market. As the US moves to reduce reliance on Chinese critical minerals, China is searching for new 'chips,' such as restricting advanced solar technology exports.