China has hit back at President Trump, accusing the US of violating their recent trade agreement, making it less likely that Trump will get the leadership call he wants to restart trade talks between the two sides.

On Monday, the Chinese Ministry of Commerce said in a statement that the US had introduced discriminatory restrictions, including new guidelines on AI chip export controls, curbs on chip design software sales to China, and the withdrawal of Chinese student visas. Beijing also rebuked the US president’s claim that China had breached the agreement reached in Geneva last month.

“If the US insists on its own way and continues to damage China’s interests, China will continue to take resolute and forceful measures to safeguard its legitimate rights and interests,” the ministry said.

China’s response to the US follows Trump’s claims on Friday that China had violated the trade truce.

“The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!” Trump wrote.

But is Trump’s tough talk just that — talk?

As Yahoo Finance’s senior reporter Alexandra Canal points out, amid all the US-China tensions, many investors believe the president talks tough on tariffs but always backs down.

In the midst of the chaos, one phrase kept surfacing across Wall Street: the “TACO” trade. An acronym for “Trump Always Chickens Out,”

That assumption has fueled a market tailwind in recent months as traders bet on policy pivots, buoyed by an initial US-China tariff deescalation earlier this month.

Yahoo Finance senior columnist Rick Newman said: “The only problem with the TACO trade is that the premise isn’t true. Trump doesn’t always chicken out. His threats are often worse than his actions, but five months into Trump’s term, it is abundantly clear that taxes on imports will be considerably higher for as long as Trump is in charge.”