Despite animosity earlier in the week, the US and China agreed yesterday (5 June) to engage in a new round of trade talks.
This follows a phone call between US president Donald Trump and Chinese president Xi Jinping, which Trump described as a “very good talk”.
In addition to a second round of trade talks, Trump said that he had received an invitation to visit China, and that he has returned the offer to XI.
“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," he told Oval Office reporters.
The call appears to have eased tensions from the start of the week, when both sides accused the other of violating the agreements made at last month’s trade talks, negotiated in Geneva.
What comes next?
The location and exact date of talks is yet to be announced. In a post on his Truth Social channel, Trump said that the two sides’ team will “be meeting shortly at a location to be determined”.
Trump confirmed that US Treasury secretary Scott Bessent, commerce secretary Howard Lutnick and US trade representative Jamieson Greer will be representing the US during talks.
Chinese state media outlet Xinhua reported Xi’s response to the phone call. He said that “dialogue and cooperation are the only correct choice for China and the United States” and that he will seek to “enhance communication in such fields as foreign affairs, economy and trade, military, and law enforcement to build consensus, clear up misunderstandings, and strengthen cooperation”.
Critical minerals
Trump told reporters that he and Xi have “straightened out any complexity” surrounding critical minerals, which were a point of contention earlier in the week.
Last week, US officials reported delays from China in granting export licences for critical mineral products, which are vital in manufacturing. The accusation was made this week by German industry leaders, who claim delays in licencing have harmed the country’s auto manufacturing sector.
Trump subsequently claimed on Truth Social that China had “violated” the terms of the agreement made in Geneva last month.
Following those negotiations, tariffs on both sides were reduced by 115% for 90 days. US exports now face a 10% duty when entering China, while Chinese goods face a 30% duty on importation to the US.
Geneva sticking point
Xi has refuted claims of any violation, saying that China has “been seriously and earnestly executing the agreement”, according to the Xinhua report.
He has repeated calls for both sides to honour the agreement made in Geneva, adding that both sides should “make good use of the economic and trade consultation mechanism already in place”.
He added that “the US side should acknowledge the progress already made, and remove the negative measures taken against China”.
When asked by a reporter in the Oval Office whether the Geneva tariff cuts remain in place, Trump responded:
“We have a deal… I wouldn’t even say that we’re finalising it up. We have a deal, and we’re just going to make sure that everybody understands what the deal is”.
US economic pressures
Trump may face more pressure to improve relations with the world’s second largest economy following poor economic data released this week.
The OECD’s Global Outlook downgraded its global growth prediction, citing increased trade barriers as one of the reasons. Its report said that this slowdown would be “concentrated in the US, Canada, Mexico and China”.
This week, a US report found also that a higher number of people were applying for unemployment benefit – the highest for eight months – raising concerns about layoffs.
Imports fell 16.3% between March and April, although some of this was attributed to importers increasing orders ahead of Trump’s initial ‘Liberation Day’ tariff announcements on 2 April.
All eyes will be on the inflation rate, which economists have warned will increase as tariffs reduce the supply of goods. So far, this hasn’t come to pass, though this may be down to diminished consumer confidence as a result of tariffs.
After several months of decline, consumer confidence rose in May, which was attributed to the Geneva tariff cuts.
