China Pushes For Special Envoys As Direct Deal With Trump Deemed 'Risky', Plans Fentanyl Concessions As Negotiating Leverage: Report

The ongoing U.S.-China trade dispute may find resolution through the reported appointment of special envoys by Presidents Donald Trump and Xi Jinping. This could pave the way for better communication channels, analysts suggest.

What Happened: The U.S. and China are grappling with how to restart trade talks. While the Chinese have proposed the concept of special envoys, the U.S. is reluctant, favoring direct negotiations between Trump and Xi. However, the Chinese view this proposal as “risky and uncertain”, the South China Morning Post reported on Saturday.

Chinese experts based in Washington believe that appointing special envoys from both countries could help address and stabilize the strained relationship.

The situation is further complicated by a dispute regarding China’s role in supplying ingredients used in the illicit production of fentanyl, a powerful opioid. This led to Trump imposing a 20% tariff on Chinese products in a previous round of duty increases.

As per a Wall Street Journal report on Friday, China may use the fentanyl issue as a lever for trade talks or as a bargaining chip in future negotiations. The report also hints that China might send Minister for Public Security Wang Xiaohong to the U.S. to kickstart discussions.

Eurasia Group’s Jeremy Chan told SCMP, "Beijing is hoping to use fentanyl cooperation as either a catalyst for US-China trade talks or a bargaining chip in a future round of negotiations, rather than a goodwill gesture ahead of trade talks as Trump's team has called for.”

Why It Matters: This development comes in the wake of China’s Commerce Ministry ‘assessing‘ a U.S. offer to discuss the crippling 145% tariffs imposed by President Donald Trump on Friday. China expressed its readiness to engage in discussions but insisted that the U.S. must be prepared to rectify “erroneous practices” and revoke unilateral tariffs.

On Sunday, President Trump stated that his primary objective was to secure a fair trade agreement with China. While speaking to reporters aboard Air Force One, he mentioned that he had no plans to talk with Chinese President Xi Jinping this week. However, he added that U.S. officials were in discussions with their Chinese counterparts on a range of issues.

Earlier, economists at Morgan Stanley projected that both nations would begin negotiations and gradually decrease tariffs on Chinese imports to 60% by the end of Q2. However, tariffs are not expected to revert to their pre-January 25 levels.

More in-depth talks in the second half of the year could further lower tariffs on Chinese imports to 34% by the end of 2025, indicating the abolition of the 20% fentanyl-related tariff.

On Friday, U.S.-listed Chinese stocks PDD Holdings Inc. PDD, Alibaba Group Holding BABA, and Baidu, Inc. BIDU climbed 4.67%, 4.34%, and 2.33%, respectively, after China showed openness to U.S. trade talks.