In a Twitter message on Tuesday, Mr. Trump said he had a “very good” telephone conversation with Mr. Xi, setting the stage for a summit on the sidelines of the Group of 20 leading global economies meeting in Osaka.
“We will be having an extended meeting next week at the G-20 in Japan,” the president tweeted. “Our respective teams will begin talks prior to our meeting.”
The news, confirmed by Beijing, came after six weeks of rising trade tensions between the two nations, which were thought to be near an accord before talks broke down in early May. The Dow Jones Industrial Average rose 353 points, or 1.4%.
“You look at the rally, the stock market, I think the market says talk is better than no talk,” White House adviser Larry Kudlow said.
Both sides are under pressure to get back to the bargaining table.
The Trump administration’s plan to levy new tariffs on $300 billion in Chinese goods—including many consumer products previously untouched—has generated stiffer resistance than the introduction of previous duties.
“The blowback from industry to proposed tariffs isn’t something that Trump can ignore,” said Michael Hirson, who heads China coverage for Eurasia Group, a risk-advisory firm. “As his political advisers are no doubt telling him, this next round of tariffs has a much more direct impact on U.S. households than previous rounds. It will be visible to the Walmartshopper.”
China, for its part, has blamed the U.S. for the impasse and said it is in no haste to make a deal. Even so, China’s economy is weakening and economists say the trade conflict is sapping domestic demand and investor confidence.
Big hurdles remain before the U.S. and China can restart formal talks or clinch a possible deal. Relations between the two countries have deteriorated significantly since late April, when many thought Osaka would be the venue for Messrs. Trump and Xi to sign a trade accord.
Washington wants Beijing to commit to changing laws and economic policies it says have contributed to a widening trade imbalance. The Trump administration also wants to phase out punitive tariffs over time rather than at once to ensure Beijing follows through on pledges to make changes.
Chinese officials want the tariffs lifted at the time a deal is signed and are insisting the text of any agreement should be “balanced”—a term that hints at Beijing’s reluctance to accede to U.S. demands that a deal spell out changes China must make to laws and regulations.
Relations have been strained by the Trump administration’s move to blacklist Huawei Technologies Co. by restricting its access to U.S. technology. Chinese officials privately, but not publicly, have said fairer treatment for Huawei should be part of any deal.
This week the company’s founder, Ren Zhengfei, said the U.S. action could cost Huawei $30 billion in lost revenue this year and next.
According to Chinese state media, Mr. Xi told Mr. Trump in their conversation Tuesday that China hopes “the U.S. will treat Chinese companies fairly,” in what was widely seen as a reference to Huawei.
At the same time, Mr. Trump is certain to face criticism at home if the U.S. goes easy on Huawei, which U.S. officials have repeatedly identified as a security risk.
“The president seems at least to open the opportunity that he might back off Huawei” as a part of trade negotiations, Sen. Mark Warner, the top Democrat on the Senate Intelligence Committee, told reporters Tuesday. “If that’s traded away, it will be a disaster.”
Shortly after Mr. Trump’s announcement, U.S. Trade Representative Robert Lighthizer appeared before the Senate Finance Committee, where he faced criticism over Mr. Trump’s plans to impose new tariffs of 25% on $300 billion in Chinese goods—effectively extending the levies to almost everything the U.S. imports from China.
Sen. Ron Wyden, (D., Ore.) pointed out that those tariffs would, among other things, raise the price of school supplies for students returning to classes in the fall—“school uniforms, gym clothes, sneakers, book bags, pencils, notebooks, you name it,” he said.
Mr. Lighthizer responded by emphasizing the importance of confronting Beijing over its trade practices: “I would say to those college students that if China steals your intellectual property, you’re not going to have jobs in the future.”
In his tweet Mr. Trump said teams from the U.S. and China would meet ahead of the meeting, but the White House and Mr. Lighthizer’s office didn’t provide details.
Such a development would have precedent. Mr. Trump agreed to delay tariffs on $200 billion in imports from China after last year’s G-20 summit in Buenos Aires, Argentina. Mr. Trump later imposed those duties and raised the level to 25% last month when the countries reached the current impasse.
“There is no question there are real things that need to be worked through, but re-engagement is a positive step,” said Myron Brilliant, head of international affairs at the U.S. Chamber of Commerce. “We’ve been waiting for a signal that the presidents would re-engage.”
The proposed $300 billion in tariffs are now the subject of public hearings held by the U.S. Trade Representative in Washington. If Mr. Trump and Mr. Xi fail to get talks restarted in Japan, those levies could be imposed as early as next month.
On Monday, the first day of the hearings, 47 of the 50 speakers asked that their industry be spared the tariffs; only two business representatives spoke in support of the Trump administration’s plan.
Well-known brands like Best Buy Co. , Roku Inc., iRobot Corp. , Kenneth Cole Productions Inc., American Standard and New Balance Athletics Inc. had executives speak at the hearings in opposition to the tariffs, along with other representatives of other makers of clothing and apparel, footwear, electronics, plumbing equipment, lighting, retailers and sporting goods.