Faltering trade talks

‘The president is obsessed’: Trump fixates on Xi call amid faltering trade talks

The White House says a call this week between the president and China’s leader is “likely” as it tries to restore a fragile truce in the U.S.-China trade war.

By Phelim Kine, Daniel Desrochers, Megan Messerly and Ari Hawkins

President Donald Trump thinks a call with China’s leader Xi Jinping will help reset souring trade talks. But even if that conversation happens this week, as the White House said is “likely,” it’s doubtful to be the breakthrough Trump is hoping for.

“The president is obsessed with having a call with Xi,” said one person familiar with the trade talks, convinced he can personally hash out deep-seated divisions between the world’s two largest economies mano a mano with Xi.

That conviction belies the difficult position the U.S. is in as it tries to pressure China to fundamentally reorder their nearly $600 billion trade relationship, without doing lasting political damage at home. And it renews questions about what Trump’s endgame is in a trade war with China that is increasingly turning into a game of chicken.

The person familiar with the trade talks, who was granted anonymity to speak candidly about their private conversations, said the administration is under “a lot of pressure” because of China’s block on critical minerals, crucial components for everything from auto and electronics manufacturing to munitions production. “I don’t think Xi is too interested in exporting any more rare earths or magnets to the United States, he’s made his position clear,” the person added, though they predicted there’s a “good likelihood” Xi would take the call to at least hear Trump out. “The president has some leverage, and the question is when he’s ready to impose maximum pressure on the Chinese government.”

A former Trump official close to the White House, granted anonymity to candidly discuss the president’s strategy, said: “Trump feels like a call between principles is a way to cut through a lot of this noise, and get right to the heart of the matter.”

Other outside observers remain skeptical Trump will actually be able to get Xi on the phone. Since the start of the president’s second term, White House officials have been publicly promising a call between the leaders is imminent. Trump even tried to suggest through oblique comments in April that the two had spoken since Trump’s inauguration.

“Beijing has a sharp nose for weakness, and for all his bravado, Trump is signaling eagerness — even desperation — to cut a direct deal with Xi,” said Daniel Russel, who was assistant secretary of State for East Asian and Pacific Affairs in the Obama administration. “That only stiffens Beijing’s resolve.”

The Chinese government has also been shaken by Trump’s public spectacles in the Oval Office — including high-profile meetings with Ukrainian President Volodymyr Zelenskyy and South African President Cyril Ramaphosa — which has made it wary of leader-level diplomacy.

“The PRC sees President Trump as unpredictable, which poses risks reputationally for President Xi,” said Rush Doshi, former National Security Council deputy senior director for China and Taiwan in the Biden administration. “It’s not usual practice for PRC diplomats to put the leader at risk of a potentially embarrassing or unpredictable encounter.”

White House press secretary Karoline Leavitt told reporters Monday that the leaders would “likely talk this week,” echoing a prediction National Economic Council Director Kevin Hassett made Sunday. But a White House official, granted anonymity to discuss behind-the-scenes conversations, said a call has yet to be scheduled.

Asked about a potential call during a press briefing on Tuesday, China’s Foreign Ministry spokesperson Lin Jian replied, “I have no information to share on that.” The Chinese Embassy in Washington did not respond to a query about it. But a statement from China’s Commerce Ministry on Monday accusing the U.S. of “stirring up new economic and trade frictions” suggests they aren’t in a conciliatory mood.

It’s just part of the finger pointing that’s ensued since Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer reached an agreement with their Chinese counterparts in early May to lower tensions in a trade war that has threatened to capsize both economies. The deal brought U.S. tariffs on China down from a floor of 145 percent to 30 percent, while Beijing slashed levies on U.S. imports to 10 percent and promised to lift barriers on critical mineral exports. The deal gave both sides a 90-day deadline to launch a new dialogue on a broader trade deal to address U.S. grievances about Chinese trade practices.

But since then, miscommunication and conflicting expectations have ground new talks to a halt — before they even started. The Trump administration has accused the Chinese government of slow-walking its restart of shipments of critical minerals and rare earth magnets.

“When they agreed in Geneva to remove their tariff and their countermeasures, they removed the tariff like we did. But some of the countermeasures, they’ve slowed on,” Greer said on CNBC on Friday.

Automakers have started to warn that impending shortages of rare earth magnets could force them to halt production and shutter factories in a matter of weeks. The magnets are critical to auto construction, from transmissions and fuel pumps to steering sensors and airbag actuators.

The two countries also remain stalled on the issue that ostensibly caused Trump to launch the trade war in the first place — fentanyl. China has offered two proposals to the White House, including one in February after Trump imposed his initial 10 percent tariff on China, Canada and Mexico.

“Everyone agrees that for any additional progress to happen on tariffs, the gateway is fentanyl,” said a business official, granted anonymity to discuss sensitive conversations.

But the U.S. has been unresponsive to the fentanyl offers, which were described as being intentionally designed by China to provoke a discussion about what Beijing could feasibly do to stem the flow of the precursors that Mexican cartels use to make the highly addictive drug.

Many Trump administration officials remain skeptical China will follow through with any agreement on fentanyl — underscoring the distrust some officials feel about the negotiations.

The Chinese government, for its part, has been angered by U.S. moves to limit U.S. exports for key Chinese industries, like semiconductors and aircraft, citing national security concerns.

Less than 24 hours after the Geneva announcement, the Commerce Department issued a warning to U.S. companies discouraging them from using chips made by the Chinese tele-computing giant Huawei, suggesting that using those chips would risk violating U.S. export control laws.

That caught Chinese officials by surprise, according to one business official granted anonymity to discuss sensitive conversations. “The Chinese side seems to legitimately believe that there was going to be this sort of 90-day stay of new actions, and that there might be some small things that happened, but nothing totally earth shattering,” said the official.

The U.S. has also angered China with new moves targeting Chinese students studying in the U.S.

“The U.S. unilaterally keeps stirring up new economic and trade frictions, exacerbating the uncertainty and instability of bilateral economic and trade relations, and not only does it not reflect on itself, but also hits the other side with a backhanded accusation that the Chinese side violates the consensus, which is a serious deviation from the facts,” a Chinese Commerce Ministry official said Monday.

Trump’s expectation that a call with Xi can reboot U.S.-China trade talks on those issues and render substantive results defies the diplomatic and policymaking protocols of China’s ruling Chinese Communist Party.

“Trump is a deal maker. Xi Jinping is not a deal maker — he’s a Party guy at the top of an administrative superstructure,” said Harry Broadman, a former assistant U.S. trade representative in the George H.W. Bush and Bill Clinton administrations. “I cannot imagine that Xi would get into specifics — at most they might agree on certain principles but that’s not likely to satisfy Trump.”

There’s also a risk that a call between the two leaders could backfire for Trump by undermining longer term trade negotiations with China.

“Elevating talks to the leader level might remove the ability to put together the kind of deeper and bigger deal that ultimately requires more consideration and time, so jumping to the leader level can be risky,” said former NSC official Doshi.

But the former Trump official dismissed the idea that there are major downsides to pushing for a Trump-Xi conversation. “From the U.S. perspective, what’s the big downside to the call? You ask for it. If they don’t do it, it’s like, ‘well, you know, we’re trying, they’re not even trying,’” the former official said. “And if they do it, maybe we get some progress.”