Trump Softens Stance on China Considers Trade Deal 

President Donald Trump surprised many by announcing he would adopt a “very cordial” tone with China in future trade deal talks. He stated that tariffs could be reduced if a bilateral agreement is reached, signaling a shift from his traditionally confrontational rhetoric toward Beijing.

Gradual Tariff Reduction Not Down to Zero

From Washington, Trump stated that tariffs “will be significantly reduced, though not to zero.” He echoed Treasury Secretary Scott Bessent’s warning about the unsustainable trade stalemate. Trump emphasized, “We will act with mutual courtesy and see what happens.” This signals a shift toward potential cooperation while maintaining cautious optimism.

China Covid-19 and a Diplomatic Tone

Trump clarified he would not raise the issue of Covid-19 during negotiations, aiming to avoid friction with Chinese President Xi Jinping. Nonetheless, the White House has reactivated a portal suggesting a lab-origin theory of the virus, escalating diplomatic tensions.

U.S. Plans Phased Tariff Scheme

According to The Wall Street Journal, U.S. officials are considering a system with 35% tariffs on non-strategic goods and tariffs of 100% or more on products critical to national security, implemented gradually over five years. The average would range between 50% and 65%.

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China Responds with Caution, Open to Dialogue

Chinese Foreign Ministry spokesperson Guo Jiakun confirmed that “the door to dialogue remains open.” However, China demands clear groundwork before Xi meets Trump. Despite the thawing rhetoric, no direct contact between the leaders has been confirmed. Consequently, the situation remains unresolved as both sides await progress.

Market Impact and Financial Pressure

The possibility of a trade agreement led to a 2.1% rise in the Hong Kong stock market and a 0.2% appreciation of the yuan. In contrast, U.S. markets remain down, and Treasury yields remain high, exacerbated by current 145% tariffs. Trump has offered limited exemptions for specific sectors.

China Strengthens Alliances and Its Global Standing

Xi Jinping has strengthened ties with leaders like Ilham Aliyev and opposes deals compromising Chinese interests. Furthermore, Foreign Minister Wang Yi and Premier Li Qiang have emphasized support for multilateralism. They also condemned offensive remarks from U.S. officials, including Vice President JD Vance. Their stance highlights China’s commitment to its strategic goals.