US ‘talking to China at highest levels’ on tariffs: Trump

Donald Trump suggests he is talking to Xi Jinping on the countries’ escalating trade war, saying he’s optimistic they can reach a deal within three to four weeks.

President Trump said he is in contact with the “highest levels” of the Chinese government about a potential deal to reduce tariffs, appearing to confirm that he is talking to Chinese President Xi Jinping himself.

Mr Trump said in the Oval Office that the Chinese government has reached out to the US “a number of times” and said it was “pretty obvious” that Xi himself has initiated contact, after being pressed repeatedly by reporters asking whether the Chinese leader had called him.

Mr Trump said he is optimistic that the US can reach a tariff pact with China, saying: “I believe we’re going to have a deal with China” and that could happen in the next three to four weeks.

But he also reiterated that the US would set its own trade parameters if a deal can’t be reached, saying if there is no deal, “we’re going to set a certain target and that will be it.” Mr Trump appeared to preview a strategy for a prolonged, multistage negotiation with China over tariffs if a deal can’t be reached soon. He also appeared to signal that he might lower China tariffs from the current 145%, even if an initial deal can’t be reached. At a certain point, Mr Trump said, he might not want higher tariffs because “people aren’t going to buy” products in the US.

But he ultimately said the US holds the cards in the trade negotiation because of the country’s enormous consumer power. The US is a “big beautiful store,” Mr Trump said, and nations will be willing to pay to access it.

“If we don’t make a deal, we’ll set a limit, we’ll set a tariff, we’ll set parameters and we’ll say come in and shop,” he said.

Hosting Italian Prime Minister Giorgia Meloni in the Oval Office, Mr Trump said he was in “no rush” to reach any trade deals because he views tariffs as making the United States wealthy.

“We’re taking in a lot of money, which we’ve never done before,” he said. “We’re going to end up with a baseline of a substantial number.”

However he said it would be easy to find an agreement with the European Union and others.

Mr Trump played down the likelihood of an accelerated timeline to wrap up deals, saying other countries “want to make deals more than I do.”

“We're in no rush,” said Mr Trump, hinting he has leverage because other countries want access to US consumers.

Although the President has a warm relationship with Ms Meloni, she was unable in their meeting to change his mind on tariffs.

“No, tariffs are making us rich. We were losing a lot of money under Biden,” Mr Trump said of his predecessor. “And now that whole tide is turned.”

Mr Trump is convinced that his devotion to tariffs will yield unprecedented wealth for his country even as the stock market has dropped, interest on U.S. debt has risen and CEOs are warning of price increases and job losses in what increasingly looks like a threat to the existing structure of the world economy.

Giorgia Meloni was in Washington to try to do a deal on the hefty tariffs placed on the EU. Picture: AP

A bond market panic was enough for Mr Trump to partially pull back on his tariffs, causing him to pause his 20 per cent import taxes on the EU for 90 days and charge a baseline 10 per cent instead. Ms Meloni's visit showed the challenge even leaders who enjoy a rapport with Mr Trump.

Ms Meloni had, in a sense, been “knighted” to represent the EU at a critical juncture in the fast-evolving trade war that has stoked recession fears. The U.S. administration has belittled its European counterparts for not doing enough on national security while threatening their economies with tariffs, sparking deep uncertainty about the future of the trans-Atlantic alliance.

She sought to portray the U.S. and Europe as natural allies in Western civilisation and said it was important to “try to sit down and find solution” to tensions over trade and national security.

“The goal for me is to make the West great again,” Ms Meloni told Mr Trump. The EU is defending what it calls “the most important commercial relationship in the world,’’ with annual trade with the U.S. totalling 1.6 trillion euros ($1.8 trillion). It was unclear, based on Ms Meloni's public interactions with Mr Trump, whether the premier has a clear understanding of what Mr Trump wants as part of an agreement.

His administration has said its tariffs would enable trade negotiations that would box out China, the world's dominant manufacturer. But Mr Trump maintains that rivals and allies alike have taken advantage of the US on trade, a position that has frustrated longstanding partners and raised concerns about whether Mr Trump is a trustworthy deal-maker.

Mr Trump tried to push back against claims that his tariffs are harming the economy, saying that gasoline and egg prices are already dropping. The president blamed the Federal Reserve for interest rates rising on U.S. debt. Rates largely increased because investors were worried about Mr Trump's tariff plans and they became less willing to buy Treasury notes, while the central bank has held steady on its own benchmark rates because of economic uncertainty.

“We have very little inflation," Mr Trump said. “I would say we have essentially no inflation.”

The EU has already engaged with Mr Trump administration officials in Washington. Maros Sefcovic, the European Commissioner for trade and economic security, said he met on Monday with Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer. Mr Sefcovic said afterward on X that it would “require a significant joint effort on both sides” to get to zero tariffs and work on nontariff trade barriers, with Mr Trump's team specifically objecting to Europe's use of value added taxes.

As the head of a far-right party, Ms Meloni is ideologically aligned with Mr Trump on issues including curbing migration, promoting traditional values and scepticism toward multilateral institutions. But stark differences have emerged in Ms Meloni’s unwavering support for Ukraine after Russia's invasion in February 2022.

The two leaders discussed the war and Italy's role in an eventual post-war reconstruction of Ukraine. Mr Trump has previously pressed Ms Meloni to increase Italy's defence spending, which last year fell well below the 2 per cent of gross domestic product target for countries in the NATO military alliance. Italy’s spending, at 1.49 per cent of its gross domestic product, is among the lowest in Europe.

"We didn’t speak about how much that percentage would be increased, even though we are truly aware that the theme of defence is particularly important,” Ms Meloni said.

AP, Dow Jones