Trump, Xi spark another lead with the global economy at risk

(Bloomberg)-US President Donald Trump and Chinese leader Xi Jinping’s latest Tit-for-Tat show reached an lead on Monday, with both countries claiming the ball is now in the other’s court. After Trump indicated openness to make an agreement with Beijing, US Vice President JD Vance on Sunday stated that the outcome “depends on how the Chinese respond.” Hours later, China’s Foreign Ministry made it clear that Beijing would take his clues from the next steps of Washington, after he had already unleashed what he acted as retaliation. “If the US continues its wrong course, China will take the necessary measures to protect its legal rights and interests,” Foreign Ministry spokesman Lin Jian said during a regular information session in Beijing. Chinese authorities do not have retaliation to Trump’s threat to set up 100% rates about their latest rare earth, with the levies not formally written in the policy. China’s markets showed resilience against the unrest. The CSI 300 benchmark for country ending on Monday has dropped just 0.5%, suggesting that investors consider renewed tension as strategic attitude. Futures indicates that US stocks will also recover from Friday’s sales after Trump softened his tone. Analysts, including at Nomura Holdings, said the largest economy of the world had too much at stake to call off a leadership meeting this month in South Korea. Treasury Secretary Scott Besent said on Monday that he believes the Trump-XI meeting ‘will still be’. Meanwhile, this week he expected the US China staff level meetings this week, along with the movements by the Trump administration, to mobilize US allies to push Beijing. Chinese officials said there could be ‘exemptions’ for their rare global trees to facilitate the trade. The question now is which side is cutting first. While it is difficult to determine who has exactly more leverage, it is very clear that China’s export sector can withstand our rates of about 50%, says Christopher Beddor, Deputy Director of China’s research director at Givingkal Dragonomics. “Beijing cares if the rates pass 100%, but as long as the scenario does not realize, rates are a lesser priority,” he added. “The rare earth actions are intended to withdraw US concessions on technology export control, but it is also not in any side’s interest to completely derail the negotiations.” Trading data showed on Monday that China’s consignments abroad are growing rapidly in six months, which has eclipsed the impact of any US tariff increase. Trump has other instruments to cause pain: He is already threatened to stop Beijing’s access to ray parts and stop selling China -critical software. Negotiators from both sides will meet in Frankfurt in the coming weeks for talks aimed at expanding a 90 -day cast that will expire in early November. These conversations are likely to lay the foundation for concessions to solve the latest flare -up. In the end, China believes that this has the upper hand, says Joseph Gregory Mahoney, a professor of international relations at East China Normal University in Shanghai. “China is confident that it is better positioned than the US to record any shocks from the trade war,” he said. “Trump needs a deal before the shopping and perhaps even before the Supreme Court rules against him,” he added, referring to a pending decision whether his rates are legal. When a US -China trade resistance fell apart in May after Washington took fresh steps against Chinese national Chip Champion Huawei Technologies Co., Beijing imposed a blockage on his rare earth magnets that are critical to producing everything from cell phones to missiles. Trump responded by relying on some export control and expressing a seismic change in Washington’s approach. If the US does not make similar concessions in this round, XI can once again get the flow of rare earth to the US by delaying the license -approval system imposed earlier this year. The dissolution of US border fabrics imposed for national security reasons is likely to face opposition from China Hawks in Washington, which – although not as prominent as in Trump’s first term – is still trying to practice a harder line on Beijing. The Republican leader contributes to the incentive to keep talks on track, and is under pressure from farmers in important voting countries to find markets for our soybeans that Beijing will not buy. Meanwhile, the loss of an agreement previously agreed with XI’s team to keep the Chinese app Tiktok online in the US, its ability to make contact with voters on the platform before the 2026 drugs. XI’s framework for controlling its rare earth-which even applies to shipping by foreign firms abroad, among the latest rules-has Mirrors measures that Washington has existed for years on his leading semiconductors. While China once condemned these tactics as ‘long-arm jurisdiction’, it now seems to play the US at its own game. “Beijing may also include some of Trump’s signature negotiating tactics,” says Ting Lu, China chief economist at Nomura. This includes “extreme opening offers, leverage exploitation and the weaknesses of opponents and credible away threats.” Wu Xinbo, director of the Fudan University’s Center for American Studies in Shanghai, said the US would have to scale back what it took after last month’s phone call between Trump and XI for the two men to hold their first meeting since 2019. In recent weeks, the US has continued with a deadline to bring about the American port fees on Chinese shipping and submitting a Biden era. “If you want to continue with the Summit meeting, your regulations, your policy must adjust,” Wu said. ‘If not – good. We do not beg for a summit meeting. ‘ – With the help of Philip Glamann, Fran Wang and Christopher Anstey. More stories like these are available on Bloomberg.com © 2025 Bloomberg LP Disclaimer: This story was published from a wire agency feed without changes to the text.