Trump–Xi Phone Call: Trade Talks Resume Amid Fragile Truce

June 5, 2025 — Washington, D.C. / Beijing

In a highly anticipated development, U.S. President Donald Trump and Chinese President Xi Jinping spoke Thursday morning for the first time since Trump’s return to office. The 90-minute phone call marked a potential turning point in the strained relationship between the world’s two largest economies, with both leaders agreeing to resume stalled trade negotiations and discuss the future of rare earth exports and tariff frameworks.

Key Takeaways from the Trump–Xi Phone Call

• Trade Talks Back On: The leaders agreed to restart formal negotiations “shortly,” with U.S. representatives Scott Bessent (Treasury), Howard Lutnick (Commerce), and Jamieson Greer (Trade) leading talks at a yet-undetermined location.
• Tariff Reductions: As part of a 90-day truce, the U.S. has reduced tariffs on Chinese imports from 145% to 30%, while China cut its own tariffs on U.S. goods from 125% to 10%.
• Rare Earth Minerals: Trump claimed progress was made on easing China’s export controls over rare earth magnets. However, China’s official readout made no mention of rare earths, suggesting unresolved tensions.
• Student Visas and Diplomacy: Trump stated that “Chinese students are welcome,” despite prior U.S. visa restrictions. Both sides extended invitations for state visits, which were mutually accepted.
• Taiwan Flashpoint: The Chinese Foreign Ministry said Xi urged the U.S. to stop “negative measures,” with specific concern over U.S. arms sales to Taiwan. The U.S. side downplayed the issue.

China vs. U.S. Readouts: Contrasting Tones

While the U.S. portrayed the call as optimistic and narrowly focused on trade, the Chinese readout struck a firmer tone. Beijing emphasized Xi’s calls for the U.S. to respect previous agreements, avoid “sabotage,” and lift restrictions on critical technologies.

Trump, speaking from the Oval Office, said the talks were “very complex stuff” but claimed “we straightened it out,” citing rare earths as a focal point. However, the Chinese side made no commitment on rare earth exports and pointed out that the U.S. had requested the call, not the other way around.

Markets React Cautiously

U.S. equity markets responded with moderate gains following the call:

• S&P 500: +0.1%
• Dow Jones: +0.2%
• Nasdaq Composite: +0.3%

Wall Street showed cautious optimism, with traders weighing the potential benefits of resumed talks against the fragile nature of previous agreements. Wendy Cutler, former U.S. trade negotiator, remarked that the call “importantly broke the impasse on critical minerals,” signaling possible momentum heading into the next round of negotiations.

Geopolitical Frictions Remain

While both leaders struck a diplomatic tone, broader tensions loom. U.S. officials continue to call for stronger enforcement of export controls, particularly on sensitive technologies like AI and aerospace. Commerce Secretary Lutnick emphasized during a Thursday hearing that China is “working to beat us” in the AI race and warned against easing controls prematurely.

Xi reportedly likened the U.S.–China relationship to a “giant ship” that must be steered carefully. His appeal: both nations must “steer clear of various disturbances and disruptions.” But history tempers expectations. The last major truce in 2018 unraveled within months, despite initial progress.

What’s Next for Traders?

For commodity and equity traders, the phone call offers potential, but not certainty. The resumption of trade talks and temporary tariff relief may provide short-term upside in markets tied to global manufacturing, rare earths, and semiconductors. However, the absence of binding commitments—especially on rare earth exports and technology—means volatility is likely to persist.

Watch for developments in:

• Semiconductor and AI sectors (related to export controls)
• Rare earth stocks and ETFs as policy updates emerge
• China ADRs and U.S. multinationals with heavy exposure to bilateral trade

The next few weeks may prove pivotal as trade envoys meet face-to-face. Markets will be monitoring headlines for signs of progress—or breakdown—on critical minerals, export controls, and enforcement mechanisms.