U.S. President Donald Trump and Chinese President Xi Jinping spoke in a rare direct phone conversation on Thursday, aiming to cool weeks of rising trade friction and a standoff over critical mineral supplies. The more than hour-long discussion ended with both sides agreeing to continue talks, although several major issues remained unresolved, particularly regarding Taiwan and export controls on rare earth elements.

According to China's official summary, Xi urged Trump to de-escalate trade pressures that have rattled global markets and warned against provocative moves on Taiwan. Trump, in contrast, painted a rosier picture on social media, describing the dialogue as "very positive" and announcing that lower-level officials from both countries would meet soon to further trade discussions. He also claimed that confusion around rare earth materials was being cleared up, although neither side confirmed specific breakthroughs.

The call comes amid growing uncertainty over rare earth mineral exports—a point of leverage Beijing has wielded in response to U.S. trade actions. Though both leaders expressed openness to reciprocal visits and emphasized the need for further diplomacy, there was no indication that the mineral dispute had been fully addressed. Trump noted that Treasury Secretary Scott Bessent and other top trade officials would soon meet their Chinese counterparts to continue negotiations.

The two nations previously agreed to a 90-day truce on May 12, pausing some of the punishing tariffs each had levied since Trump’s return to office. However, this temporary reprieve has not solved long-standing concerns, including U.S. allegations of China’s unfair trade practices, the role of Chinese state-owned enterprises, and issues like fentanyl smuggling. Despite brief market rallies, the broader bilateral relationship remains tense and uncertain.

China's recent restrictions on the export of key minerals have disrupted global supply chains, impacting sectors from automotive manufacturing to defense technology. These restrictions are widely seen as Beijing’s way of pressuring the U.S. by targeting industries that depend on these critical components. Trump’s administration, meanwhile, has introduced new limitations on semiconductor technology exports to China, further intensifying the trade standoff.

Though Trump continues to speak favorably of Xi—often praising his political strength—their interactions remain unpredictable. While Trump believes direct leader-to-leader talks are essential for resolving deadlocks, Beijing typically prefers that substantive agreements be reached at lower diplomatic levels first. Thursday’s call, initiated by Trump, is being watched closely by investors and global observers, especially as the year-end holiday season looms and supply chain stability hangs in the balance.
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