On Thursday, June 5, 2025, U.S. President Donald Trump and Chinese President Xi Jinping held a 90-minute phone call, sparking hope for progress in the stalled trade negotiations between the world’s two largest economies. The call, initiated by Trump, comes at a critical time as tensions over tariffs, technology, and economic competition continue to strain relations between the United States and China.
A Rocky Road to Trade Talks
Trade negotiations between the U.S. and China hit a wall shortly after a May 12 agreement to lower tariffs temporarily while discussions continued. The U.S. reduced its tariffs on Chinese goods from a staggering 145% to 30%, and China dropped its tariffs on U.S. goods from 125% to 10%. This 90-day pause was meant to foster productive talks, but disagreements over key issues have kept the two nations at odds.
The U.S. accuses China of withholding exports of critical minerals, which are vital for industries like technology and renewable energy. Meanwhile, China has criticized the U.S. for imposing restrictions on advanced chip sales and limiting Chinese students’ access to U.S. college and graduate school visas. These disputes have fueled sharp swings in global markets, as investors worry about the impact on the $600 billion trade relationship between the two countries.
Trump and Xi’s Conversation: A Step Forward?
The recent call, described by Trump as “very good” and focused “almost entirely” on trade, ended with a “very positive conclusion for both Countries,” according to his Truth Social post. Trump announced that trade officials from both nations will soon meet at a yet-to-be-determined location to continue negotiations. This development has raised cautious optimism among investors, with stocks opening higher on Thursday, though gains later faded as markets awaited further details.
This wasn’t the first time Trump and Xi have spoken this year. On January 17, just before Trump’s inauguration, the two leaders discussed trade and the U.S.’s concerns about the flow of fentanyl from China. However, Trump’s tone has shifted in recent weeks. On Wednesday, he posted on social media, “I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!” He also accused China of violating their trade agreement, signaling frustration with the slow pace of progress.
The Bigger Picture: Competing Visions
At the heart of the U.S.-China trade dispute are competing economic goals. Trump is focused on reducing America’s reliance on Chinese manufacturing and boosting domestic industries. In 2024, the U.S. ran a $295 billion trade deficit with China, a gap Trump wants to close by bringing factories back home. On the other hand, China is pushing to dominate cutting-edge industries like electric vehicles and artificial intelligence, which it sees as key to its economic future. These clashing priorities make compromise difficult.
China’s economy has faced its own challenges, including a real estate crisis and lingering effects from COVID-19 lockdowns, which have weakened consumer spending. Meanwhile, the U.S. has imposed export controls on advanced chips, citing national security concerns, while China views these moves as attempts to stifle its technological growth.
What’s Next?
The Trump-Xi call could be a turning point, but significant hurdles remain. Treasury Secretary Scott Bessent has suggested that only direct talks between the two leaders can break the deadlock. Even if negotiations resume, the underlying tensions—over trade imbalances, technology, and global influence—are likely to persist.
For now, the world watches closely. The outcome of these talks will not only shape U.S.-China relations but also impact global markets and supply chains. As both sides prepare for the next round of discussions, the stakes couldn’t be higher.
