Speaking to reporters in Washington on Monday, Trump said talks with China would take place “probably over the next 24 hours.” During the weekend, he announced that tariffs on China would take effect at 12:01 a.m. on Tuesday. 

“If we can’t make a deal with China, then the tariffs will be very, very substantial,” Trump said.

The Hang Seng China Enterprises Index, which tracks Chinese stocks traded in Hong Kong, rose as much as 4% on Tuesday. The offshore yuan rallied nearly 1% from Monday’s nadir to trade around 7.31 per dollar. The onshore markets will reopen on Wednesday following a Chinese New Year break.

White House Press Secretary Karoline Leavitt later told Fox News there’s a plan for Trump to speak with Chinese President Xi Jinping about “illegal Chinese fentanyl that is killing tens of thousands of Americans every single year.” 

“The president has made it very clear to China that we are not going to tolerate that,” she said. “And I would also add that many of President Trump’s tariffs from the first term are still in effect.”

The focus has turned to the world’s No. 2 economy after Trump reached last-minute agreements with Mexico and Canada to delay 25% tariffs in return for tougher measures against migration and drug trafficking at the border. For Beijing, a deal for splitting ownership of China-owned app TikTok would likely also be on the agenda of any leaders’ call. 

“GREAT INTEREST IN TIKTOK!” Trump posted on his Truth Social platform on Monday evening in the US. “Would be wonderful for China, and all concerned.” The Republican has given ByteDance Ltd.’s social media app, which has been flagged as a national security threat, 75 days to find a partner in the US to keep operating in the country.

China playbook

China’s reaction to Trump’s initial tariff announcement—coming in the middle of a weeklong Lunar New Year holiday—was relatively muted. The Chinese Commerce Ministry issued a statement expressing strong “dissatisfaction” and vowed unspecified “corresponding countermeasures,” while saying China would file a complaint at the World Trade Organization.

That wasn’t unusual. During the first trade war, Beijing typically retaliated only after tariffs became law. But it may not follow the same playbook this time around given the economy is in worse shape and it exports fewer products directly to the US. 

China also has more tools at its disposal if it chooses to hit back. A series of laws passed since Trump’s first term, for example, give Beijing greater sway over domestic business deals in the name of national security.

Trump’s weekend order called on China to leverage its vast surveillance network to stop criminal organizations facilitating the flow of illicit drugs. Exactly what that would entail wasn’t specified, giving Xi no obvious path to avoiding the tariffs—especially since Beijing has already pledged to crack down on domestic chemical companies involved in the deadly synthetic opioid.

“On the fentanyl issue China can do a lot of things to make President Trump happy. That’s a no-brainer to me,” said John Gong, a professor at the University of International Business and Economics in Beijing who has worked as a consultant for China’s Commerce Ministry. “Compared to a 10% tariff on Chinese exports to the United States, even the entire extermination of the fentanyl industry in China is totally worth it.”

China and the US have in recent years coordinated on fentanyl issues, including through a counter-narcotics working group launched in January 2024. The previous year, the governments agreed to restart cooperation on curbing the flow of the synthetic opioid and its precursors into the US, with the Biden administration removing a Chinese police laboratory from a sanctions list as a concession.

The Biden administration welcomed China’s efforts in November, saying Beijing has shut down online platforms and companies supplying precursor chemicals for synthetic drugs, as well as arresting people connected to the illicit trade. 

Trump and Xi last spoke before the US president’s second inauguration, in a call in which they discussed trade, fentanyl and TikTok. Trump described that conversation as “very good,” but days later followed through on threats for tariffs on China. 

Chinese state media questioned Trump’s rationale for the tariffs, warning that connecting the issues of fentanyl and trade would only make “governance of this problem more difficult.” 

“What’s the logical relationship between fentanyl and tariffs?” China Central Television wrote in an article late Monday. “The world can’t solve this ridiculous question.”