The Blubber

China announced it is currently reviewing the possibility of resuming trade negotiations with the United States, marking the first indication of potential dialogue since Donald Trump imposed a new round of tariff hikes last month.

In a statement released Friday, China’s Ministry of Commerce acknowledged that top U.S. officials have repeatedly expressed interest in engaging with Beijing on tariff-related issues. The ministry urged Washington to demonstrate "sincerity" in its approach toward China.

“The U.S. has recently conveyed its willingness to engage in talks through relevant channels,” the ministry said. “China is in the process of assessing this.”

Separately, The Wall Street Journal reported that Chinese officials had reached out to the Trump administration to clarify what specific changes the U.S. is seeking regarding the production of precursor chemicals used in fentanyl. The report also indicated that Beijing is weighing whether to send high-ranking officials—including top security figure Wang Xiaohong—for direct talks with their American counterparts, as part of a broader strategy to ease tensions and potentially reopen trade discussions.

According to the Wall Street Journal, this possible overture may include a proposal related to fentanyl as a goodwill gesture, potentially offering the U.S. a diplomatic off-ramp to de-escalate hostilities and resume dialogue.

Following these developments, U.S. markets responded positively. Stocks climbed on Friday, boosted by both the signals from China and encouraging employment data. The S&P 500 appeared poised to recover losses incurred after Trump’s tariff escalation, as investor confidence grew around the possibility of renewed trade talks.

China’s latest comments suggest a possible shift in the prolonged standoff between the world’s two largest economies. Trump’s recent tariff increase brought U.S. duties to their highest level in a century, prompting Beijing to retaliate in kind.

Behind the scenes, China has also begun easing some pressure on its own economy by selectively lifting tariffs on about $40 billion worth of American imports. A circulated list of 131 products—reportedly including items like pharmaceuticals and industrial chemicals—points to sectors where China depends heavily on U.S. goods.

However, there remain significant obstacles to reinitiating formal discussions. Trump has insisted that Chinese President Xi Jinping must reach out directly before any negotiations can begin. Earlier this week, Treasury Secretary Scott Bessent reiterated that it is China’s responsibility to make the first move if it wants to end the impasse.