Trump Claims Xi Phone Call and 200 Trade Deals as Beijing Flatly Denies Contact and Markets Respond with Skepticism
Trump's Contested China Claims: Markets Skeptical as Beijing Denies Communication
Diplomatic Discord Deepens as U.S.-China Trade Tensions Rattle Global Markets
As President Donald Trump departed for Rome to attend Pope Francis's funeral Friday morning, the trail of confusion he left behind regarding U.S.-China relations continued to reverberate through diplomatic circles and financial markets alike. Trump doubled down on disputed claims of direct communication with Chinese President Xi Jinping and announced the completion of "200 trade deals" despite mounting evidence to the contrary, triggering further market instability and diplomatic friction.
"He's called. And I don't think that's a sign of weakness on his behalf," Trump told Time Magazine in an interview published Friday, referring to Xi. The president further insisted that he had completed "100 percent" 200 trade deals globally, suggesting they would be unveiled "over the next three to four weeks."
These assertions were swiftly and categorically rejected by Beijing. The Chinese Foreign Ministry took the unusual step of publicly contradicting the U.S. president on social media, declaring: "China and the US are NOT having any consultation or negotiation on #tariffs. The US should stop creating confusion."
For investors already unsettled by bruising tariffs of up to 145 percent imposed on Chinese imports since Trump returned to the White House in January, the contradictory messaging has intensified market anxiety. The S&P 500 index has now declined approximately 10 percent year-to-date, with the semiconductor sector bearing the brunt of the damage.
Did you know? As of April 25, 2025, the S&P 500 Index is down about 6.75% year-to-date, marking one of its weakest starts in decades. After hitting a record high in February, the index has dropped sharply amid renewed market volatility, economic slowdown concerns, and global trade tensions, with defensive sectors like health care and consumer staples faring better than technology and consumer discretionary stocks.
The Reality Behind the Rhetoric
"This is becoming a familiar pattern—grand claims of progress followed by denials and confusion," said a Washington-based trade policy analyst . "The probability of an imminent grand bargain appears close to zero."
Multiple sources familiar with diplomatic channels between Washington and Beijing confirmed to this publication that no call between the leaders has taken place since the implementation of the new tariff regime. Chinese officials have emphasized that any future trade negotiations would need to begin at the working level and reach tentative agreements before any direct leader-to-leader communications would be considered.
When pressed about the purported conversation as he left for Rome, Trump deflected, saying: "I don't want to comment on that, but I've spoken to him many times."
This is not the first instance of disputed claims regarding U.S.-China engagement since Trump's return to office. Last month, the president announced that Xi was planning to visit the U.S. "in the not too distant future," but sources with knowledge of diplomatic channels indicated no such visit had been discussed.
Markets React as Trade War Deepens
The divergence between presidential rhetoric and economic reality has created a uniquely challenging environment for investors trying to navigate the increasingly fraught U.S.-China relationship.
"We're essentially facing a fat-tailed distribution of outcomes ranging from muddling-through stalemate to further escalation," explained a senior portfolio manager at a global asset management firm. "The market is pricing in prolonged friction as the baseline scenario."
In game theory, "cheap talk" refers to communication between players that is costless to transmit and does not directly affect payoffs. Unlike costly signaling, its credibility isn't guaranteed because there's no penalty for lying. This type of communication is often studied in strategic interactions like negotiations.
The tangible impacts of the trade tensions are becoming increasingly apparent. Container port volumes from China to the U.S. have plummeted, with bookings down 48 percent for the upcoming two weeks. The U.S. 10-year Treasury yield has rallied 20 basis points this month as investors pull back global growth expectations, while the Chinese yuan has slipped to a two-year low, trading beyond 7.45 against the dollar.
China–US Container Shipping Volume: 2024–2025 Trends and Tariff Impact
| Period | Key Data / Change | Trend / Context |
|---|---|---|
| June 2024 | China–US volume up 15% YoY; 60% of Asia–US traffic. US imports up 10.4% YoY. | Growth driven by early holiday prep and 10 straight months of YoY gains. |
| Jan 2025 | China–US imports rose 10.6% MoM, 10.2% YoY (997,909 TEUs). US set January import record. | Pre-tariff stockpiling and pre-Chinese New Year surge. |
| Feb 2025 | Imports from China fell 12.5% MoM; US total down 10%, but up 4.7% YoY. | Seasonal dip + impact of 10% US tariff (Feb 4). China share: 39%. |
| Mar 2025 | China–US down 12.6% MoM, 25.4% below July 2024 peak; still up 9.4% YoY. | New 10% tariff (Mar 4) raised total to 20%. China share dropped to 32%. |
| Early Apr 2025 | China bookings fell 64% WoW (Mar 24–31 vs Apr 1–8); total US bookings also down 64%. | Major tariff escalation (100%+ by Apr 9–11) + Chinese retaliation froze trade flows. |
| Tariff Overview | US tariffs on China surpassed 100% by mid-April; China responded with full reciprocal tariffs. | Triggered shipment front-loading, trade slump, cost spikes, and recession risks. Data discrepancies noted. |
A chief economist at leading capital market research institute, noted: "Trump's rhetoric appears designed to shift market expectations while preserving maximal flexibility. In game theory terms, it's classic 'cheap talk' meant to influence behavior without committing to any particular course of action."
Corporate America Feels the Squeeze
For U.S. multinationals with significant exposure to Chinese manufacturing, the uncertainty presents an acute strategic challenge. Companies like Apple are accelerating diversification plans, with reports indicating the tech giant aims to double its production in India by 2026.
Several major industrial original equipment manufacturers are quietly executing contingency plans to relocate portions of their supply chains. Meanwhile, chemicals and materials companies face a potentially painful combination of demand slump and cost pressures, with Moody's recently cutting its outlook for INEOS Quattro, the chemicals business led by British billionaire Jim Ratcliffe.
In contrast, certain emerging economies stand to benefit as manufacturers accelerate "China-plus-one" strategies. Vietnam, India, and Mexico are seeing increased investment flows as companies seek to mitigate risk by diversifying manufacturing locations.
The "China Plus One" strategy refers to companies diversifying their supply chains beyond relying solely on China. This approach aims to reduce risks associated with geopolitical tensions, rising costs, and potential disruptions by establishing additional manufacturing or sourcing operations in other countries, often elsewhere in Asia.
"The reshaping of global supply chains takes time, but we're seeing the pace accelerate dramatically," observed a supply chain consultant who works with Fortune 500 companies. "What might have been a decade-long process is now compressed into a two-to-three-year timeline."
The Road Ahead: Scenarios and Strategies
Amid the uncertainty, analysts are mapping potential pathways forward. The consensus baseline scenario—assigned a probability of approximately 55 percent by several investment houses—envisions a "frozen conflict" where tariffs remain near current levels without genuine negotiations.
Under this scenario, global trade growth would likely remain subdued below 2 percent, with the U.S. experiencing mild stagflationary pressures. Alternative scenarios range from partial de-escalation (with Trump cutting tariffs to around 60 percent for domestic political reasons) to further escalation (where China retaliates on services and intellectual property, potentially prompting U.S. tariffs to rise to 200 percent).
A minority of analysts maintain that a surprise "mini-deal" focused on agricultural products and fentanyl enforcement remains possible, which could provide both sides with a face-saving path toward reduced tensions.
"Don't rule out selective, sector-specific compromises that could be framed as wins domestically for both administrations," suggested one trade policy expert with connections to both Washington and Beijing. "Areas like agricultural commodities or digital services could see carve-outs even as broader tensions persist."
Looking Beyond the Noise
For now, market participants are advised to distinguish between political theater and substantive developments. Trump's assertion of "200 trade deals" carries little informational value without corresponding documentation filed with the U.S. Trade Representative, World Trade Organization notifications, or Congressional records.
The International Monetary Fund has already trimmed its 2025 trade growth forecast to 1.7 percent, acknowledging the headwinds created by U.S.-China tensions. Central banks globally face the complex challenge of balancing the inflationary impact of higher imported goods prices against cooling economic growth.
As one veteran market strategist put it: "The smart money is positioning for sticky supply-chain bifurcation while maintaining flexibility. The watchword is convexity—owning assets that could benefit significantly from any détente while limiting downside exposure if current tensions persist or intensify."
For the immediate future, the contradictory narratives from Washington and Beijing seem likely to continue, creating an environment where distinguishing signal from noise becomes an essential skill for investors and policymakers alike.