Washington, D.C., May 14, 2025
In a significant development in US-China trade relations, President Donald Trump has expressed openness to engaging directly with Chinese President Xi Jinping to finalize a comprehensive trade agreement. This announcement follows a recent 90-day truce between the two economic powerhouses, marked by substantial tariff reductions aimed at easing ongoing trade tensions.
A New Phase in US-China Trade Relations
During an interview aboard Air Force One en route to Saudi Arabia, President Trump stated, “I could see myself dealing with President Xi directly to work out the details of the trade deal between the US and China.” He emphasized the importance of mutual openness, noting, “Many years ago, we opened up the USA; now it is time for China to open up, and that’s part of our deal” .
This willingness for direct engagement comes on the heels of a significant easing of trade tensions. Both nations have agreed to reduce tariffs dramatically: the US slashing rates on Chinese goods from 145% to 30%, and China reducing its tariffs on US goods from 125% to 10% .
Market Reactions and Economic Implications
The announcement of the tariff reductions and the potential for direct talks between the two leaders have positively impacted global markets. Asian stocks rose, with Hong Kong’s Hang Seng index up 1.4%, and the MSCI Asia-Pacific index gaining 1.1%. The US dollar, however, experienced a slight decline, reflecting investor optimism over the easing trade tensions and softer US inflation data .
Analysts suggest that this truce and the prospect of a finalized trade deal could bolster global economic stability, particularly benefiting export-driven economies. However, they also caution that underlying issues remain unresolved, and the long-term success of any agreement will depend on sustained commitment from both parties.
Challenges Ahead
Despite the positive developments, skepticism persists regarding the durability of the truce and the potential for a lasting agreement. Previous negotiations have faltered due to disagreements over intellectual property rights, technology transfers, and market access. Moreover, the US administration continues to pursue strategies aimed at reducing dependence on Chinese manufacturing, signaling that strategic competition remains a central theme in bilateral relations
President Trump has indicated that if a comprehensive deal is not reached within the 90-day window, the US may consider reinstating higher tariffs. This stance underscores the administration’s commitment to securing a deal that addresses longstanding trade imbalances and structural concerns.
Looking Forward
The potential for direct talks between President Trump and President Xi Jinping represents a critical juncture in US-China relations. Such high-level engagement could pave the way for a more comprehensive and enduring trade agreement, addressing not only tariff-related issues but also deeper structural challenges.
As the 90-day truce progresses, stakeholders worldwide will closely monitor developments, hopeful that sustained dialogue and mutual concessions will lead to a stable and mutually beneficial economic relationship between the two nations.
