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Trump and Xi talk on phone as tariff battle continues

The president had recently aired his frustrations about the state of talks with China.

China's President Xi Jinping and President Donald Trump Chinese President Xi Jinping and President Donald Trump attend a welcome ceremony at the Great Hall of the People in Beijing in 2017.Fred Dufour / AFP - Getty Images file

China's President Xi Jinping and President Donald Trump Chinese President Xi Jinping and President Donald Trump attend a welcome ceremony at the Great Hall of the People in Beijing in 2017.Fred Dufour / AFP - Getty Images file

President Donald Trump and Chinese President Xi Jinping held a phone call Thursday amid ongoing tensions between the two superpowers.

Chinese state media and the Chinese foreign ministry said the call happened at the White House's request. No other information was immediately made public. The Chinese foreign ministry said Thursday morning that the call was ongoing as of 9 a.m. ET.

It’s the first known call between the two leaders in Trump’s second term, though the two spoke in January before Trump’s inauguration.

Trump had posted to social media early Wednesday to air his frustrations with how the conversations between the U.S. and China have been going.

“I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!” Trump wrote at 2:17 a.m.

Stocks ticked higher in premarket trading on news of the call amid investor optimism that easing tensions could boost trade, but the major indexes were in the red shortly after markets opened.

The U.S. and China have been locked in a heated trade war since the early days of Trump's second administration, with volleys of tariffs and retaliatory tariffs ratcheting up duties on billions of dollars’ worth of goods.

The White House and the Chinese Embassy did not immediately return requests for comment.

The current tariff level on Chinese imports brought into the U.S. is at least 30%. That's down from the 145% punitive level Trump had imposed until a handshake agreement in Geneva last month led to a mutual stand-down that also saw China reduce its duties on U.S. imports down to 10% from 125%.

But tensions heated up again Friday after Trump accused China of violating the Geneva understanding, though without adding many specifics. That prompted China to level a similar accusation against Trump on Monday.

Trump remains fixated on closing America's trade deficit with China, which is the difference between how much the U.S. imports from China versus how much it exports. On Thursday, fresh data showed the gap dropped sharply in April.

It's an indication that the new tariffs have begun to hit hard. Data from the U.S. Commerce Department showed the largest-ever drop in total imports. The deficit with China declined to $19.7 billion, the lowest level since March 2020.

"The sharp narrowing in the April U.S. international trade deficit tells us the temporary first-quarter splurge by businesses pulling-forward demand to get ahead of tariffs has run its course," Wells Fargo economists wrote in a note after the data was released.

Trump has pledged that his unprecedented tariffs gambit will lead to trade deals — but despite a flurry of promises and pronouncements that they are near, no firm deals have materialized. Even the agreement with the U.K. announced last month from the Oval Office has been described as merely a "political pact" rather than a formalized, mutually beneficial trade agreement.

It's led to growing critiques that Trump's tariffs strategy has little to show so far besides scrambling the investment and hiring plans of businesses the world over.

Trump faces a particularly complex set of issues with China. Alongside trade, he is also attempting to wrestle TikTok away from Chinese ownership, while seeking to stem the flow of illicit fentanyl that authorities say largely originates from Chinese manufacturers.

While there are signs of slowing fentanyl seizures at the U.S. -Mexico border, there has been no sign of progress on the TikTok talks. A deadline that would force TikTok’s Chinese parent company ByteDance to sell the popular social media app or face a U.S. ban is set to expire June 19. Trump now faces the prospect of having to extend the deadline for a third time.

Author: Rob Wile and Evelyn Cheng, CNBC

Source: CNBC

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