The Trump administration signaled on Sunday that it is open to a potential deal with China to ease fresh trade tensions, while maintaining pressure on Beijing to roll back new export restrictions that have rattled global markets, according to Bloomberg.
Vice President JD Vance urged China to “choose the path of reason” as the latest trade dispute between the world’s two largest economies intensified. He argued that President Donald Trump holds a stronger negotiating position should the standoff deepen.
Trump struck a similar tone of cautious optimism on social media, suggesting there may still be a path toward compromise while warning Beijing of the risks of escalation. “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!” Trump wrote on Truth Social.
The remarks from both Trump and Vance suggest Washington aims to balance tough rhetoric with an opening for de-escalation — reassuring investors that a full-blown trade war may still be avoided. “The recent policy moves suggest a wider range of potential outcomes than appeared to be the case ahead of the last few key US-China meetings,” Goldman Sachs Group Inc. economists Jan Hatzius and Andrew Tilton wrote in a note. They added that the most likely outcome would see both sides “pull back on the most aggressive policies” and extend the current pause on tariff escalation reached in May.
Global markets, however, have been quick to react to the latest tensions. Stocks, oil, and cryptocurrencies slumped on Friday following Trump’s threat to retaliate against Beijing’s new export curbs on rare earth materials. Yet US futures rebounded in early Asia trading on Monday after Trump’s more conciliatory comments.
Speaking on Fox News, Vance described the situation as an “ongoing negotiation.” He said, “It’s going to be a delicate dance, and a lot of it is going to depend on how the Chinese respond. If they respond in a highly aggressive manner, I guarantee you, the president of the United States has far more cards than the People’s Republic of China. If, however, they’re willing to be reasonable, then the US would, too.”
China’s Ministry of Commerce issued its own statement earlier Sunday, urging Washington to stop threatening higher tariffs and to engage in further talks. “Threatening with high tariffs at every turn is not the right way to get along with China,” the ministry said. “If the US persists in its own course, China will resolutely take corresponding measures to safeguard its legitimate rights and interests.”
Tensions have spiked in recent days after Beijing introduced a series of export controls, some targeting products containing rare earth elements, though several measures won’t take effect until November. “It’s become very clear to everybody that this power grab by the Chinese won’t be tolerated,” said US Trade Representative Jamieson Greer on Fox News’s The Sunday Briefing.
Trump responded Friday by announcing plans to impose 100% tariffs on Chinese goods and restrict certain software exports beginning November 1. He also hinted at possible limits on aircraft part shipments but suggested the date was chosen to allow room for negotiation. “Let’s see what happens,” Trump told reporters aboard Air Force One. “For me, November 1 is an eternity. For somebody else, it’s right around the corner.”
Greer said that timeline gives both sides space to find common ground and could calm markets in the short term. “These measures aren’t in place yet. It’s scheduled for Nov. 1. So I think we’ll see the markets calm this coming week as they see things settle out,” he said.
Goldman Sachs economists noted that Beijing’s latest actions might be designed to extract greater concessions from Washington, potentially resulting in a “market-positive outcome” where US tariffs are lowered. Still, they cautioned that the opposite scenario — a full reimposition of triple-digit tariffs — remains possible.
Vance, who said he had spoken with Trump over the weekend, emphasized that while the president values his personal rapport with Xi Jinping, the US has significant leverage. “We have a lot of leverage,” he said. “And my hope, and I know the president’s hope, is that we don’t have to use that leverage.”
Greer pointed out that China’s recent clarification — that export controls do not constitute an outright ban — suggests Beijing may already be trying to de-escalate. “Clearly, the Chinese have realized that they have wildly overstepped the bounds of what’s acceptable,” he said.
The two countries only recently paused their trade hostilities after a spring escalation that saw tariffs surge to at least 125% on both sides before an agreement rolled them back to current levels — with Chinese duties at 10% and combined US levies at 30% on Chinese imports.
“We’re going to find out a lot in the weeks to come about whether China wants to start a trade war with us, or whether they actually want to be reasonable,” Vance said. “I hope they choose the path of reason.”
As Bloomberg reports, Trump’s administration is signaling both firmness and flexibility — leveraging market pressure while leaving the door open for diplomacy as the November deadline approaches.
