US–China phone call opens path to renewed negotiations but deeper issues remain unresolved
President Donald Trump and Chinese President Xi Jinping have agreed to resume trade negotiations following a 90-minute phone call on Thursday, marking their first direct conversation since Trump’s return to office. The call, initiated by the White House, focused “almost entirely” on trade and resulted in what Trump described as “a very positive conclusion for both countries.”
The leaders pledged that their respective trade teams would meet soon, with Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer to represent the US. A location for the talks has not yet been determined.
“There should no longer be any questions respecting the complexity of rare earth products,” Trump wrote on Truth Social, referring to a key point of friction between the two nations.
Rare earth curbs and stalled Geneva deal loom large
The call comes amid renewed tensions over a May 12 truce reached in Geneva that had temporarily rolled back steep tariffs — the US dropped duties on Chinese imports from 145% to 30%, while China reduced levies on US goods from 125% to 10%. A 90-day window was agreed to finalise a broader trade agreement.
Since then, however, Washington has accused Beijing of slow-walking its commitments, particularly on rare earth exports vital to the auto, defence, and tech sectors. China introduced new licensing requirements in April, and approvals have been sluggish. According to European industry bodies, fewer than a quarter of applications have been granted, with export volumes halving in April.
Auto plants across Europe and Asia are already experiencing shutdowns and delays. The German car lobby (VDA), Japanese automakers like Nissan and Suzuki, and trade groups from India to the US have all warned of worsening supply chain disruptions.
“If the situation does not change quickly, production delays and even stoppages can no longer be ruled out,” said VDA president Hildegard Müller.
Notably, shares in Australian miner Lynas Rare Earths (ASX:LYC) soared 12.52% on Thursday to close at $9.26.
Diplomatic overtures mask structural tensions
In the readout of the call, both leaders exchanged invitations for state visits. Trump confirmed he and First Lady Melania Trump would travel to China, while Xi was invited to the White House.
But behind the diplomacy, both sides struck contrasting tones. China’s Ministry of Foreign Affairs called on Washington to “remove the negative measures” imposed since the Geneva agreement and warned the US to “handle the Taiwan question prudently.”
Trump, meanwhile, reiterated that Chinese students were welcome in the US, despite a recent administration crackdown on student visas and technology exports. “It’s an honour to have them,” he said, though officials have signalled increased scrutiny of Chinese nationals studying sensitive subjects.
“We were straightening out some of the points, having to do mostly with rare earth magnets and some other things,” Trump told reporters in the Oval Office.
Markets cautious, deeper fractures unresolved
Wall Street reacted with cautious optimism. While equities initially rose on news of the call, gains faded as investors digested the limited scope of progress.
Wendy Cutler, former US trade negotiator, noted that the call “prevented derailment of trade talks but produced no clear breakthroughs on key issues.”
Both sides remain at odds over technology restrictions, student access, and broader strategic goals. The US wants to reduce reliance on Chinese manufacturing and reindustrialise key sectors, while China seeks to continue expanding into areas like electric vehicles and AI.
