Last week, Trump, serving his second term as the US President, had a telephonic dialogue with his Chinese counterpart, Xi Jinping. The primary aim of this conversation was to negotiate a conclusion to the ongoing trade conflict, exacerbated by the considerable tariffs imposed by President Trump on items procured from China, the largest global producer. The Chinese foreign ministry acknowledged the communication, indicating further that it was Trump who had made the call. Details related to progress made during this exchange weren’t immediately available, despite it being the first direct interaction between the two heads of states since President Trump resumed office for his second term with an objective to revamp international trading relationships.
The call to China’s Xi happened just a short while after Trump acknowledged Xi as a powerful adversary in trade deliberations. Trade talks between these international giants had reached a deadlock soon after an agreement on May 12, amidst exchanges to lower their respective tariff rates. Allegations from the U.S. accuse China of obstructing the export of essential minerals. Conversely, the Chinese government is aggrieved by America’s limitation on its advanced chip sales and restrictions on student visas for undergraduate and postgraduate studies.
The American president moved to alleviate the standoff by decreasing his initial 145% tariff on Chinese merchandise down to 30% for a time span of 90 days, thereby enabling dialogues. Remarkably, China followed suit by lowering its import taxes on U.S. goods from 125% to a mere 10%. This unpredictable trajectory of tariff amendments has sparked drastic fluctuations in global markets, posing a significant threat to the trade relationship between these two nations.
The U.S. Treasury Secretary, Scott Bessent, opined that a direct conversation between Trump and Xi might be the key to resolving these discordances, paving the way for subsequent, more productive talks. However, a subtle undercurrent of strain still exists between the two countries, which could potentially impede progress.
The American President aspires to decrease the nation’s dependency on Chinese imports, which contributed to an enormous trade deficit of $295 billion last year. On the other hand, China aims at maintaining its traditional supremacy in global manufacturing. It also plans to broaden its influence on emerging technologies such as AI and electric vehicles, pivotal for securing its economic prospects.
In a previous tête-à-tête, Trump and Xi had conversed just three days prior to inauguration day back in January. The intricacies of this interaction are yet to be seen in the next round of trade negotiations. The tumultuous relationship between the U.S. and China has significant implications on international trade dynamics, global markets, and mutual dependencies.