Donald Trump 1, Xi Jinping 0? China 'evaluating' US offer to talk tariffs

It has taken almost 100 days. In fact, it has taken nearly seven years, but US President Donald Trump may have finally landed a body blow in his long-running trade confrontation with Chinese President Xi Jinping . This week, a subtle but unmistakable signal emerged from Beijing: China is "evaluating" overtures from the US to begin trade negotiations. It’s the first time Chinese officials have publicly acknowledged Washington’s request to talk tariffs since Trump hiked duties to historic levels—145% on some imports.

Driving the news
China’s commerce ministry on Friday confirmed it is “evaluating” multiple US overtures to begin trade talks over President Donald Trump’s sweeping new tariffs - which impose duties of up to 145% (even up to 245% in "rare" cases) on Chinese goods. The ministry signaled openness to dialogue but warned sharply that “coercion and extortion” won’t yield results.

“The US has recently taken the initiative on many occasions to convey information to China... saying it hopes to talk with China,” said the ministry. “Attempting to use talks as a pretext to engage in coercion and extortion would not work.”

This is the first public acknowledgment from Beijing that Trump’s tariff pressure may be forcing a recalibration - or at least a rethink - in China’s trade posture.


Why it matters
The shift comes amid clear signs that China’s economy is reeling from the trade war's second round. With factory activity shrinking, exports plunging, and supply chains disrupted, Beijing now appears more willing to engage — even if publicly it continues to frame talks as a matter of principle, not pressure.


At the same time, markets are interpreting the signals as the first crack in the trade standoff, driving up Asian equities and currency values.

“The high level of reciprocal tariffs on China is not sustainable,” said economist Woei Chen Ho of United Overseas Bank. “The beginning of negotiations will likely drive market volatility again because it is not expected to be plain sailing.”

The big picture: Tariffs start to bite
The impact of Trump’s tariffs is showing up across China’s economy.

• The official Purchasing Managers’ Index (PMI) fell to 49.0 in April, marking the worst contraction in 16 months, per China’s National Bureau of Statistics.
• New export orders cratered to 44.7, the lowest since December 2022.
• The China Containerized Freight Index is down 26% this year.
• Export cargo volumes dropped 10% in April versus a 4% increase in March, according to IMF-Oxford’s PortWatch.
• Shipping platform Flexport says 25% of Transpacific Eastbound routes were canceled in late April — surpassing even early-pandemic levels.

The root cause: Trump's "Liberation Day" tariff package, which ratcheted up total duties on Chinese goods to 245% in some categories, including electronics, appliances, and machinery.

“It’s definitely worse than expected. It shows tariffs started to bite,” said Robin Xing, chief China economist at Morgan Stanley.

Zoom in: Pain on the factory floor

• In Zhejiang province, one of China’s top export hubs, businesses are struggling to stay afloat.
• Yiwu trader Ding Heng, whose firm exports plastic Christmas trees, says US orders have halted completely. “There’s still time now. After two months there won’t be,” Ding told the Economist.
• Other businesses share the strain: Shuangma, a plastics manufacturer, says canceled orders have cost it $20 million.
• A white-goods company in Ningbo reported 3,000 American orders canceled.
• Su Zhan, whose company makes red MAGA hats, said half of his orders vanished after the new tariffs took effect. “Perhaps shipping them to Mexico and scraping off the ‘Made in China’ label might work,” Su quipped.
• Still, not all resentment is aimed at Washington. Some exporters acknowledge the US is simply protecting its industrial base.
• “Without manufacturing, a country’s power will wane,” one Yiwu trader told The Economist.

Between the lines: Beijing’s quiet retreat?
While China’s official tone remains firm, its actions suggest retreat. Beijing has:

• Created an exemption list for select US goods — such as pharmaceuticals, jet engines, and microchips.
• Accelerated domestic stimulus plans to prop up affected sectors.
• Held multiple high-level economic meetings, including a Politburo session, to signal readiness for policy support.
• At a news conference, officials from the National Development and Reform Commission pledged more stimulus in Q2 to offset export losses.

Still, China insists it won’t enter talks without “sincerity” from Washington - namely, tariff rollbacks.

“If we fight, we will fight to the end; if we talk, the door is open,” the commerce ministry said. “But saying one thing and doing another... will not work on the Chinese side.”

What they’re saying

• President Trump on Wednesday struck a confident tone: “There’s a very good chance we could do a deal with China.”
• Treasury secretary Scott Bessent, speaking to Fox Business: “First, we need to de-escalate, and then we’ll start focusing on a larger trade deal.”
• Interim national security sdviser Marco Rubio, a longtime China hawk: “The Chinese are reaching out... They want to meet, they want to talk.” Rubio also warned Beijing's recent tone shift is driven by economic necessity, not goodwill.

Market pulse: Traders scent a thaw

• Markets responded swiftly to China’s messaging:
• Hang Seng China Enterprises Index rose over 1%.
• Offshore yuan climbed 0.3% to 7.2566 per dollar.
• Even the Australian dollar, seen as a China proxy, extended gains on the optimism.
• Bloomberg economists Chang Shu and Eric Zhu noted that while signs of pressure are mounting, “it is critical that China backs up its message with speedy and effective stimulus.”

What’s next: Stalemate or soft landing?
Despite the shift in tone, a formal breakthrough remains elusive. Beijing continues to tie any negotiation to the rollback of Trump’s 145% tariffs, which the White House has so far resisted.
Meanwhile, structural issues persist

• Domestic consumer demand remains weak, hobbled by a property crisis.
• Many Chinese manufacturers lack easy alternatives to the US market.
• Attempts to divert exports to other regions have run into global overcapacity concerns.
• “Although the government is stepping up fiscal support, this is unlikely to fully offset the drag,” said Zichun Huang of Capital
• “We expect the economy to expand just 3.5% this year.”
• Global banks, including UBS and Goldman Sachs, have revised down China’s 2025 GDP growth projections from 5% to as low as 3.8%.

A tipping point?
So where does that leave us? In a familiar place: mutual suspicion, economic pain, and no formal negotiation schedule. But unlike past rounds of this drama, the advantage-for now-appears to be in Washington’s corner.

China is not collapsing. But it is blinking.

Trump’s tariff escalation has hit its mark. With China’s exports, production, and optimism all sliding, Beijing is now reassessing its options. While it hasn't capitulated, the change in rhetoric and behind-the-scenes moves suggest the pressure is real.

Whether this leads to real de-escalation or a new standoff will depend on whether both sides can translate tactical maneuvering into meaningful dialogue - without either appearing to blink.
(With inputs from agencies)