Fixed it by adding --wait argument to the command in the .gitconfig file (or ./.git/config file for local change). Like:

[diff]
    tool = vscode
[difftool "vscode"]
    cmd = code --wait --diff $LOCAL $REMOTE

Then running the following command:

git difftool --no-prompt --tool=vscode ProgrammingRust/projs/actix-gcd/src/main.rs