By: Russ Spencer

In a development that could mark a turning point in the ongoing U.S.-China trade war, President Donald Trump and Chinese President Xi Jinping held a 90-minute phone call on Thursday and agreed to restart high-level negotiations aimed at resolving the escalating dispute between the world’s two largest economies. As reported by CNBC, both leaders expressed cautious optimism following the call, which Trump described as “very good” and “almost entirely focused on trade.”

Trump, writing on his Truth Social platform on Thursday morning, said the call “resulted in a very positive conclusion for both Countries,” though specific details remained scarce. According to the CNBC report, the renewed talks are expected to involve a U.S. delegation led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer.

The commitment to resume negotiations comes amid rising friction between Washington and Beijing over issues ranging from rare earth mineral exports to tech sector restrictions and student visa policies. CNBC emphasized that the timing of the call was particularly critical, as trade relations appeared to be at their most strained since the tariff war began under Trump’s first administration.

Beijing’s Ministry of Foreign Affairs and China’s embassy in Washington confirmed that Trump had requested the call, highlighting the urgency the White House has placed on salvaging the economic dialogue. The president, who has staked much of his economic platform on tough stances against Chinese trade practices, appears eager to deescalate tensions without appearing to compromise.

In recent weeks, the Trump administration has accused China of failing to follow through on its pledge—made during a May meeting in Geneva—to expand the export of rare earth minerals to the U.S. These materials, critical to sectors including defense, aerospace, and renewable energy, remain at the heart of global supply chain tensions. “There should no longer be any questions respecting the complexity of Rare Earth products,” Trump cryptically posted after the call, without offering further explanation, the CNBC report noted.

Meanwhile, Trump has continued to ratchet up economic pressure on Beijing. In April, his administration imposed sweeping 145% tariffs on all Chinese imports—a sharp contrast to the 10% tariff applied to most other trading partners. In retaliation, China raised tariffs on U.S. goods to 125%, effectively creating a partial trade embargo between the two economic giants. As CNBC reported, those measures have begun to cause ripple effects across global markets and supply chains, fueling investor uncertainty and stalling business investments.

The breakthrough in Thursday’s call builds on the progress of the May Geneva talks, where both sides had agreed to temporarily ease retaliatory tariffs. Still, the report on CNBC highlighted that renewed tensions quickly emerged afterward. Chief among them: Beijing’s frustration over new U.S. restrictions on Chinese student visas and a White House warning to American industries against using Chinese-manufactured semiconductors.

The Trump administration has insisted that the additional restrictions on chip exports are designed to protect U.S. national security. However, Beijing sees them as punitive and has accused Washington of undermining goodwill built in Geneva.

Trump and Xi’s conversation comes at a crucial moment for both leaders. Trump is seeking to shore up economic credibility ahead of a contentious election cycle, while Xi is navigating domestic economic challenges and growing international scrutiny over China’s strategic ambitions. As the CNBC report noted, this was only the second one-on-one call between the two presidents this year—the first took place on January 17, prior to Trump’s second-term inauguration.

Despite the tensions, Trump struck a cordial tone in the aftermath of the call. “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 wrote in a social media post the day before the meeting. According to the report on CNBC, Trump also said Xi had extended a formal invitation for him and First Lady Melania Trump to visit China, which he “reciprocated.”

Absent from the conversation, according to the White House and confirmed by CNBC, were any discussions related to Russia, Ukraine, or Iran—indicating a highly focused dialogue centered on trade alone.

The stakes for the renewed trade negotiations are high. In 2024, the trade relationship between the U.S. and China totaled nearly $600 billion, making each nation a critical economic partner for the other. Any shift in policy or deterioration in talks could have global consequences, from inflationary pressures to technology supply shortages.

While markets reacted with cautious optimism—stocks seesawed early Thursday on initial reports of the call, according to CNBC—analysts warn that lasting breakthroughs will depend on substantive concessions from both sides. Whether the new round of talks can deliver that remains to be seen.

For now, the resumption of dialogue marks a rare moment of diplomacy in an otherwise combative economic relationship. As CNBC put it, “a temporary thaw in a prolonged trade freeze”—but one whose outcome could define the trajectory of global markets for years to come.