Xi Calls Trump's Bluff And Wins, Time And Time Again

2025-06-06 05:02:29

(MENAFN- Asia Times) China's Xi Jinping and US President Donald Trump spoke over the phone Thursday (June 5), the first known formal contact of the Trump 2.0 era. Though signs of détente were few, the fact that the leaders of the world's two biggest economies are speaking at all marks progress.

Essentially, the two presidents talked about talking more down the line to lower the temperature on tariffs and access to rare earth minerals. The exchange fueled hope on Wall Street that a trade war truce might be in the cards.

“The US and China appear to have stepped back from their latest brink,” says analyst Bill Bishop, who writes the Sinocism newsletter.“Trump and Xi finally had their call, the Geneva 'truce' may be back on track, and to listen to Trump, the [China] halt in exports of rare earth magnets may be ending.”

Trump told reporters that the“very good” call“straightened out any complexity, it's very complex stuff. I think we're in very good shape with China and the trade deal.” Yet the“grand bargain” global markets hoped Trump would strike with China still risks becoming more like a grand flop.

The Chinese side, for example, seems far less impressed by the Thursday call, which officials suggested was perfunctory and vague. As Cornell University economist Eswar Prasad puts it, the“asymmetry” in Beijing's and Washington's reporting of the call suggests that Xi held to a tough line and Trump“didn't get much acquiescence” to his demands.

Odds are good that Xi will continue to drag things out, believing time is on China's side. By appearing above the fray, Xi continues to outmaneuver Trump, who often seems to be negotiating with himself. China is also having some success positioning itself as the adult in the room as Trump lurches from one trade stance to another, hour by hour.

“The overall objectives of the trade aggression, other than the display of raw power, are as muddled as ever,” says Arthur Kroeber, an analyst at Gavekal Research.

Kroeber adds that“fresh hostilities between the US and China show that the many questions left hanging after the Geneva ceasefire in mid-May still have no satisfactory answers. It's not clear whether US trade policy is being run by Trump, his trade negotiators or his national security team.”

So far, Xi has taken a go-slow approach to trade deal negotiations. Efforts by US Treasury Scott Bessent and Trade Representative Jamieson Greer to convince markets that a pact was in the works, imminent even, haven't been reciprocated from the Chinese side.

China has reason to tread carefully. On April 10, Trump hiked China tariffs to a cartoonishly high 145%. Such a levy is“effectively an embargo,” notes University of Michigan economist Justin Wolfers. It's also an action likely to turn off the other side, squandering any remaining goodwill between governments.

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