US President Donald Trump on Wednesday characterized Chinese President Xi Jinping as “very tough” and “extremely hard to make a deal with,” raising questions about the future of the fragile trade truce between the world’s two largest economies.
Trump’s Criticism of Chinese Leader Escalates Tensions
Trump published his assessment of Xi Jinping on his Truth Social platform around 2:17 AM Washington time. “I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!” the president wrote.
The Chinese Foreign Ministry responded diplomatically, with spokesman Lin Jian stating that “China’s principle and position on developing China-US relations is consistent.” The White House did not immediately respond to Trump’s overnight message.
Key Sticking Points in Trade Negotiations
The main stumbling block appears to be critical minerals, specifically rare earth elements. The Trump administration accuses Beijing of continuing to restrict access to rare earth magnets, despite Washington’s decision to reduce tariffs depending on China lifting such controls.
The problem lies in different interpretations of what was agreed during trade talks in Geneva. According to experts:
- The US expected complete removal of approval requirements for rare earth exports
- China does not confirm this interpretation and has a different view of the agreements reached
- Beijing accuses the US of unilaterally introducing new discriminatory restrictions
Trade War Escalation Continues
Tensions between the countries are escalating again after the May tariff truce. The Trump administration in recent weeks has:
- Banned shipments of critical aircraft engine components to China
- Restricted Beijing’s access to chip design software
- Sought to impose new restrictions on Huawei Technologies
- Announced plans to revoke visas for Chinese students
Beyond economic tensions, geopolitical friction is also growing. China’s Foreign Ministry protested Defense Secretary Pete Hegseth’s assertion that China poses an imminent threat to Taiwan.
Chinese Economy Under Pressure
The world’s second-largest economy has shown resilience to the strictest tariff regime in a century, but:
- The manufacturing sector has contracted in recent months
- Real estate prices continue a multi-year decline
- Consumer spending power is weakened by falling property values
Record government spending and stimulus supported growth in the first quarter, but long-term prospects remain uncertain.
Impact on Financial Markets
Market reaction to Trump’s message was muted as US-China tensions had increased in recent days. The index of Chinese stocks traded in Hong Kong limited gains to 0.5%, while the Bloomberg Dollar Index fell 0.1%.
Speculation about a possible conversation between Trump and Xi Jinping supported risk appetite among investors, which also affected gold markets. Spot gold stabilized at $3,353.71 per ounce, while August futures reached $3,377.72 per ounce. Dollar strengthening due to expectations of US-China talks simultaneously pressured prices across the broader metals spectrum – platinum rose 0.4% to $1,079.40 per ounce, while silver remained stable at $34.618 per ounce.
Future of Trade Relations
Trump repeatedly states that direct talks with Xi Jinping are the only way to resolve differences between the nations. However, the Chinese leader hesitates to speak with his American counterpart and prefers key issues to be negotiated by advisors.
The White House insists that a conversation between both leaders is “likely” this week, while China has yet to confirm plans for direct high-level negotiations.
