After weeks of mounting speculation, United States President Donald Trump and Chinese President Xi Jinping finally connected via telephone late Thursday evening. According to statements from both sides, the call spanned roughly an hour and a half and concentrated primarily on the bilateral trade dispute that has roiled global markets over the past year. Trump described the conversation as “very positive” and indicated that it laid the groundwork for further negotiations on tariffs. Xi, through official Chinese media, emphasized the need for the U.S. to remove “negative measures” and reiterated his willingness to deepen dialogue. With Washington and Beijing tentatively agreeing in mid-May to a 90-day pause on additional tariffs, observers are now watching closely to see whether this high-profile exchange will translate into a durable easing of tensions—or simply serve as another stopgap in a volatile relationship.
Background: Tariffs, Rare Earths and a Fragile Truce
Since Trump’s inauguration in January 2025, the United States and China have engaged in an escalating tit-for-tat series of tariffs and export restrictions. At the heart of the dispute lies a fundamental disagreement over trade imbalances, intellectual property protections and the role of state subsidies in China’s export-driven economic model. In 2024, both nations imposed triple-digit duties on hundreds of billions of dollars’ worth of goods. U.S. industrial and agricultural exporters found themselves scrambling to absorb sudden cost increases, while Chinese manufacturers faced reduced access to a major market.
April 2025 saw a dramatic new escalation: Beijing announced a suspension of exports for a broad range of rare earth minerals—critical inputs for electric vehicle batteries, computer chips and defense technologies. Rare earth elements such as neodymium and dysprosium are essential for the production of high-performance magnets used in everything from wind turbines to precision-guided munitions. Analysts warned that any prolonged Chinese cutoff of these materials could cripple U.S. manufacturers and precipitate supply-chain disruptions worldwide.
In response to mounting economic fallout, both sides agreed on May 12 to a temporary 90-day truce, rolling back some of the steepest tariffs and pausing new punitive measures. This “ceasefire” was billed as a chance to negotiate a more comprehensive trade agreement. Still, it left intact many lingering grievances—ranging from U.S. concerns over forced technology transfers to Chinese objections about “unfair” tariffs on steel and aluminum. The rare earth standoff in particular remained unresolved, with American automakers and defense contractors bracing for potential shortages even if duties were reduced.
The Call: Key Points of Discussion
According to a post on Trump’s Truth Social account, the two presidents spoke for approximately 90 minutes. “The call focused almost entirely on trade,” Trump wrote, noting that “our respective teams will be meeting shortly at a location to be determined.” He characterized the outcome as “a very positive conclusion for both countries” and asserted that “there should no longer be any questions respecting the complexity of rare earth products.”
Details from the Chinese side were released via a statement from the government-published Xinhua News Agency. In it, Beijing reiterated that “the U.S. side should take a realistic view of the progress made and withdraw the negative measures imposed on China.” The statement also confirmed Xi’s renewed invitation to Trump for a state visit to Beijing, which Trump accepted.
Although neither side released a full transcript of the conversation, several high-level themes can be gleaned:
- Tariff Rollbacks and Negotiation Timelines: Both leaders urged their respective negotiating teams to resume talks without delay. While the 90-day window runs until mid-August, the U.S. and China aim to establish a roadmap for further tariff reductions well before then. Trump indicated that American negotiators will seek reciprocal concessions—particularly in areas like agricultural exports, technology licensing and services.
- Rare Earth Minerals: Trump emphasized that discussions on rare earths had reached a “very good conclusion,” suggesting that technical working groups will soon meet to clarify definitions and quotas. China has long leveraged its near-monopoly on rare earth processing to gain bargaining power, but Beijing may be motivated to avoid a protracted standoff that threatens its own export volumes to third-party markets.
- Broadening the Agenda: While trade and tariffs dominated the discussion, both sides signaled intent to extend dialogue into other contentious areas. Trump reportedly raised concerns about illicit fentanyl flows originating in China, while Xi pressed for an end to U.S. licensing restrictions on Chinese semiconductor equipment. Despite these nods to secondary issues, the primary focus remained on unwinding punitive levies.
Domestic Reactions in Washington
In the White House briefing room, press secretary Karen Hughes echoed the president’s upbeat tone. “This was a constructive conversation that sets the stage for real progress on trade,” Hughes told reporters. “President Trump made clear that American workers and farmers expect results, and we believe that engaging China at the highest level is the best way to deliver on those expectations.”
Congressional reaction was mixed. A handful of Republicans applauded Trump’s willingness to personally negotiate, viewing direct talks as essential to break through bureaucratic deadlock. Senator John Barron (R-TX) released a statement declaring, “President Trump understands that talking to China at the top is the only way to protect American jobs and ensure fair competition.”
Yet some in Congress remained skeptical. Representative Elaine Whitmore (D-CA), a staunch critic of Trump’s earlier tariff blitz, cautioned that “the devil is in the details.” Whitmore urged transparency in forthcoming negotiations, warning that the administration must ensure any concessions do not undermine longstanding labor and environmental standards.
Beijing’s Calculated Response
In Beijing, state-run media framed the call as a reaffirmation of Chinese priorities. The People’s Daily editorial board stressed that “China has always been willing to resolve differences through dialogue on the basis of equality and mutual respect.” The Global Times, known for a more hawkish tone, declared that “if the United States truly wants an agreement, it must remove obstacles such as unjust tariffs and technology restrictions.”
Chinese Foreign Ministry spokesperson Li Mei told reporters that “the conversation between President Xi and President Trump underscores our shared commitment to resolving trade frictions. We look forward to U.S. action that matches its words.” Li also emphasized that “China’s development path is not for sale” and hinted at potential countermeasures should Washington renege on agreed terms.
Despite official calm, some state-affiliated analysts warned that Beijing’s patience may wear thin if the U.S. fails to deliver on tariff rollbacks. In an op-ed for China Securities Journal, economist Zhang Wei cautioned that “China cannot indefinitely stomach unilateral tariffs on its core high-tech exports. The rare earth issue is not solely a bargaining chip—these materials are critical to our own emerging industries.”
Implications for Global Markets and Supply Chains
Financial markets responded positively to news of the call. Asian equity indexes rose on Friday morning, with Hong Kong’s Hang Seng Index up 1.8 percent and Tokyo’s Nikkei 225 gaining 1.2 percent. U.S. futures for the S&P 500 climbed in premarket trading, reflecting investor optimism that a de-escalation in trade hostilities could boost corporate earnings.
Still, supply-chain managers remain cautious. Automakers in Detroit and Stuttgart have already begun reallocating production schedules to account for potential rare earth shortages. If Chinese rare earths remain restricted past the 90-day moratorium, U.S. manufacturers face higher costs to source alternative suppliers—such as Australia’s Mount Weld or emerging processors in Africa. In the defense sector, Pentagon procurement officers are tracking ongoing export controls on advanced electronics components, which China has threatened to restrict if U.S. technology sanctions persist.
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According to a report by the Peterson Institute for International Economics, an extended U.S.–China tariff war could shave up to 0.7 percentage points off global GDP growth in 2025. That projection factored in reduced trade volumes, higher input costs, and cascading disruptions in technology transfer. The recent 90-day pause slowed this deterioration somewhat, but uncertainty remains the biggest threat to medium-term recovery.
Rare Earths: The Linchpin in Future Negotiations
Rare earth minerals represent a uniquely sensitive juncture in the dispute. China produces more than 85 percent of the world’s processed rare earths. Although countries like Australia, Brazil and South Africa possess sizable ore deposits, the refining capacity has historically lagged—both technologically and environmentally. In April, Beijing’s decision to halt rare earth exports was partially framed as a response to U.S. restrictions on Chinese semiconductor manufacturing equipment. By leveraging its downstream processing capabilities, China signaled that it could disrupt not only U.S. consumer electronics but also critical defense production.
During Thursday’s call, Trump suggested that “complexities of rare earth products” had been clarified, implying that negotiators have agreed on specific definitions or exemptions. Some industry insiders interpret this to mean a carve-out for certain existing long-term supply contracts—ensuring that automakers and defense contractors can access at least a baseline supply for the next several months. How China and the U.S. address downstream processing fees, environmental regulations and export quotas will likely determine whether the rare earth threat is neutralized or reappears in future rounds of talks.
Trade War Fallout on Other Sectors
Beyond automobiles and defense, other industries have felt the ripple effects of U.S.–China tensions. U.S. soybean exporters in the Midwest saw shipments to China plummet after Beijing imposed retaliatory duties in 2024. Although the 90-day pause lifted some of those tariffs, lingering concerns about sudden policy reversals continue to weigh on farmers’ planting decisions. High-tech firms in Silicon Valley have struggled to secure advanced chip-design software licenses after the Trump administration imposed restrictions on the sale of U.S.–made semiconductor tools to Chinese firms. Those measures were not addressed directly in Thursday’s call, but Trump reiterated that “our teams will be meeting” to hash out outstanding technology transfer issues.
In the technology sector, both U.S. and Chinese companies have shelved or delayed major joint‐venture projects. Chinese telecom giant Huawei, for instance, has sought to diversify its supply chain away from American components. Meanwhile, U.S. software companies—including those specializing in artificial intelligence and cloud computing—have grown increasingly wary of investing in Chinese research partnerships. Until both governments resolve core disputes over intellectual property protections and data security, cross-border collaboration remains on ice.
President Trump’s Upcoming China Visit
Shortly after concluding the call, Trump confirmed that he intends to accept Xi’s invitation for a state visit to Beijing. “He invited me to China and I invited him here,” Trump told reporters in the Oval Office, where he was joined by German Chancellor Friedrich Merz. “We both accepted, so I will be going there with the First Lady at a certain point, and he will be coming here—hopefully with the First Lady of China.”
A Trump visit to Beijing would mark his first official trip to China since his re-election in 2024. During their 2017 exchange visits, Trump and Xi had walked through the Forbidden City together in Shanghai and laid groundwork for a broader strategic dialogue. However, bilateral relations deteriorated sharply in the past two years amid mutual accusations of “economic coercion” and “technology theft.” Observers note that Trump’s willingness to travel to Beijing again—while maintaining a hardline stance on trade—could signal an attempt to recalibrate the high‐stakes strategic competition between the world’s two largest economies.
The timing of Trump’s trip remains uncertain. White House officials have suggested a fall visit, possibly coinciding with a summit in Shanghai or Xi’s state banquet in Washington. Logistical planning will need to accommodate complex security protocols and overlapping diplomatic engagements, including G20 meetings and the United Nations General Assembly later this year.
Concluding Assessment: A Tentative Step Toward Stability
Thursday’s unprecedented 90-minute call between Trump and Xi represents a critical moment in a fraught relationship marked by rapid escalation and intermittent pauses. At a minimum, it reestablishes direct, high-level communication channels that had atrophied since mid-2024. By agreeing to narrow the conversation almost exclusively to trade, the two leaders signaled their shared recognition that economic stability is essential for both domestic constituencies.
Yet beneath the veneer of cordiality remain profound strategic disagreements. U.S. officials continue to view China as a long-term rival capable of challenging American economic and military primacy. Chinese leaders, in turn, see U.S. demands for open markets and technology reforms as attempts to curb Beijing’s rise. While the 90-day truce has forestalled immediate economic apocalypse, many uncertainties linger: Will rare earth exports resume in full? Will both sides honor their commitments to roll back tariffs? How will peripheral issues—fentanyl trafficking, Taiwan’s status, human rights—factor into broader negotiations?
For now, investors and corporate executives will breathe easier that at least one chapter in the trade war has been paused. Stock markets rallied in anticipation of lower input costs, and some businesses—particularly in the auto and electronics sectors—have resumed near-term purchasing. Farmers appear more willing to plant soybeans, and automakers are reportedly reconsidering postponed electric vehicle launches. Still, analysts warn that any sign of bad faith in implementing the tariff agreement could provoke a rapid re-escalation.
In a final public remark, Trump emphasized that “we believe this can be a lasting outcome, but there should be no illusions: We will hold China to its word.” Xi, for his part, assured Chinese state media that “China’s door for dialogue remains open, but our bottom line is sovereignty and fair competition.” As the two sides prepare to convene negotiating teams in the coming weeks, the world watches—and hopes—that this long-anticipated call marks the turning point toward a more predictable and mutually beneficial trade relationship.
