Trump’s Softer China Stance Could Earn Beijing Tariff Extension as White House Eyes Xi Meeting and Trade Breakthrough: Report

President Donald Trump has reportedly toned down his attacks on China amid the White House’s efforts to secure a final trade deal with the Asian nation. 

The Trump administration's efforts to arrange a meeting between the leaders of two of the world’s largest economies could also be a motive for the U.S. president’s conciliatory tone. 

A Bloomberg report said, citing people familiar with the matter, that Trump’s disposition toward China contrasted with his harsher stance on many other major trading partners. With respect to China, the U.S.’ focus is now on clinching purchase deals just as he did during his first term.

As recently as this week, Nvidia CEO Jensen Huang announced that the White House has given its commitment to allow the artificial intelligence chipmaker to resume selling its China-compliant H20 AI chips in the country. This would lift a ban that has been in place since April, when the U.S. Commerce Department announced a stricter ban on China chip exports. 

The financial markets have remained resilient in the face of trade standoffs. The SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETFs) that tracks the S&P 500 Index, and the iShares MSCI China ETF (MCHI) are up 7% and 22%, respectively, this year. 

The report stated that Trump was now seeking “quick wins” with China, rather than addressing the substantial trade deficits between the two countries. His voice was the least hawkish while discussing China in his meetings with the staff. 

Lending credence to the report, Trump on Tuesday said he would fight China in a “friendly fashion.”

Trump’s thawed stance assumes importance as he has the final say in all negotiations.

The U.S. could go easy on China, with officials planning to delay an Aug. 12 deadline that would revert the levies to 145% following the expiration of a 90-day suspension. The report said the extension could be for another three months, as Trump is busy dealing with other countries, including key trading partners.

A July 9 deadline to revert to the tariffs announced in early April was extended earlier this month as Trump sent letters to more than half a dozen nations, communicating fresh levies. These countries have until Aug. 1 to negotiate bilateral trade deals.

The president has also stated that other smaller trading partners could be targeted with tariffs of 10% or more. 

China has given the impression that it has an upper hand in its negotiations with the U.S., given its firm grip on rare earth magnets, on which the latter is heavily reliant.

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