U.S. President Donald Trump and Chinese President Xi Jinping resumed direct communication after a prolonged diplomatic freeze, agreeing to restart tariff and trade negotiations. The call, which Trump called “very positive,” lasted over 90 minutes and marked a pivotal development in an increasingly hostile trade environment that has seen both nations weaponize key strategic materials. The dialogue comes just weeks after both countries accused each other of violating a mid-May trade truce reached in Geneva.
US-China Reengagement Sparks Renewed Dialogue on Tariffs and Rare Earths
The White House confirmed the resumption of bilateral trade talks, to be led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer. Chinese state media emphasized Xi’s call for the U.S. to remove “negative” trade measures, while both leaders extended mutual invitations for state visits. The resumption of talks appears aimed at averting further escalation ahead of Trump’s self-imposed July deadline for a new round of reciprocal tariffs.
Highlights:
Trump and Xi agree to restart trade talks; both invited each other for state visits.
U.S. team led by Bessent, Lutnick, and Greer will spearhead negotiations.
Trump calls the conversation a “very good” step; Xi presses for easing of sanctions and tariffs.
Strategic Minerals and Technology Now Front and Center
Rare earth minerals and ethane gas emerged as new pressure points in the evolving trade standoff. Xi’s outreach followed weeks of mounting U.S. pressure over China’s restrictions on rare earth exports—critical for electronics and defense. Trump, in response, initiated curbs on U.S. ethane exports, a material vital to China’s plastics industry. These moves underline the shift toward the strategic use of materials as trade leverage, with both countries fortifying their positions in sectors with limited substitutes.
Highlights:
U.S. restricts ethane exports; China controls 90% of global rare earth processing.
Ethane now seen as a “geopolitical weapon” in the trade arsenal.
GM, Ford, and Toyota warn rare earth curbs may hit car production.
Commerce Secretary Lutnick’s involvement signals tech export restrictions will be a central issue.
Legal Uncertainty Over US Tariffs Complicates Trade Trajectory
On the legal front, Trump’s latest doubling of steel and aluminum tariffs—from 25% to 50%—has drawn judicial scrutiny. A U.S. federal appeals court temporarily upheld the tariffs, despite an earlier lower court ruling that deemed their enactment unlawful. While Trump’s administration pushes ahead, the legal battle adds uncertainty to ongoing trade negotiations and could further complicate enforcement credibility.
Highlights:
Steel and aluminum tariffs doubled; legal rulings in conflict over their legality.
Trump warns 90-day pause on reciprocal tariffs expires in early July.
White House sends formal reminders to trade partners about upcoming deadlines.
Xi’s Calculated Risk and China’s Broader Strategic Goals
Xi Jinping’s decision to re-engage appears to be a tactical move, aimed at defusing immediate tensions and reopening channels for concessions on tech sanctions and tariff relief. Analysts suggest that China’s longer-term goals remain focused on securing equal enforcement mechanisms, sanction relief, and softening the U.S. tech containment strategy. Whether Xi’s gamble will pay off depends heavily on the internal dynamics of a fractured Trump administration.
Highlights:
Xi likely seeks tariff reductions, export control relief, and tech cooperation.
China’s core demands include sanction parity and enforcement guarantees.
Analysts warn without substantive U.S. shifts, talks may offer only temporary stability.
US Trade Deficit Narrows as Imports Plunge
Amid tariff-related maneuvering, the U.S. trade deficit narrowed sharply in April as imports posted a record drop. The contraction is attributed to Trump’s tariff strategy and businesses reducing preemptive import stockpiling in response to anticipated levies. The figures reflect how trade tensions are reshaping supply chains and affecting trade volume.
Highlights:
U.S. trade deficit falls in April; imports decline sharply.
Companies reduce inventory stockpiling amid tariff pressure.
Trade data reinforces broader impact of escalating tariff policy.
