Tensions Rise Between US and China Amid Trade Dispute Following Trump-Xi Call

Wed Dec 24 2025 12:52:20 GMT+0200 (Eastern European Standard Time)

Following a recent phone call between President Trump and President Xi, trade tensions escalate as new sanctions and tariffs loom, showcasing the ongoing tug-of-war between the world's largest economies.

The aftermath of a September 19 phone call between U.S. President Donald Trump and Chinese President Xi Jinping has ignited significant trade tensions, with both countries engaging in a series of retaliatory moves. The U.S. expanded sanctions against Chinese companies, prompting retaliation from China regarding rare earth materials. President Trump threatened to impose additional tariffs, complicating the prospects for an upcoming trade deal. Experts suggest both nations are leveraging their positions in a delicate balance of power, with China potentially taking a more aggressive stance.

WASHINGTON (AP) — A calm phone conversation on September 19 between U.S. President Donald Trump and Chinese President Xi Jinping rapidly descended into a tumultuous trade conflict. The U.S. broadens its sanctions against certain Chinese firms, prompting a strong response from Beijing, which retaliates with expanded permitting rules on rare earth materials critical for technology and defense.

As both sides intensify their actions, Trump threatens a 100% tariff hike on Chinese imports, undermining any goodwill ahead of a proposed summit in South Korea linked to the Asia Pacific Economic Cooperation summit later this month. Trump declared, I threaten them with something I think is much more powerful: tariffs, hinting at potential restrictions on U.S. exports to China, including airplane parts.

In response, China firmly rejected Trump's tactics. A spokesperson for its commerce ministry stated, Willful threats of high tariffs are not the right way to get along with China, asserting that while Beijing does not desire a trade war, it will be prepared to confront it.

This latest episode underscores the adversaries' ongoing attempts to assert influence within the global economic landscape. Experts suggest both the U.S. and China are resorting to leverage in negotiations, as former U.S. ambassador to China, Nick Burns, noted the search for a more level playing field. Craig Singleton from the Foundation for Defense of Democracies elaborates on the emerging dynamics, stating, dominance depends on who controls the rhythm of escalation, not who has more tools on paper. While the U.S. has the capability to impose significant costs, China has shown a capacity for enduring economic strain.

Beijing's recent maneuvers, particularly in the realm of rare earth products, signal a more aggressive position. Jonathan Czin, a former National Security Council director, cited Xi's view that he may hold the advantage due to recent diplomatic efforts by the U.S. to appease China.

Informants within the negotiations suggest a disparity in strategy between the two nations, comparing U.S. reactions to tic-tac-toe while China operates on a chess level. Gabriel Wildau of Teneo points out that the eventual trade agreement, if realized, would aim to address shared interests without skewing heavily towards the U.S., highlighting that both sides possess the necessary leverage to reach a mutually beneficial resolution.