US President Donald Trump and Chinese President Xi Jinping agreed to resume trade talks, and the American leader said they resolved a dispute over rare earth exports that has been at the heart of tensions between the world's two largest economies.

Trump acknowledged Thursday that trade relations with China had "gotten off track a little bit" but said now "we're in very good shape with China and a trade deal." He posted earlier on social media that "there should be no more questions about the complexity of the rare earths."

"We're getting some points straight, mostly with the rare earth magnets and a few other things," the president later told reporters in the Oval Office.

Stocks rose as investors hoped the discussions would ease the dispute. The S&P 500 erased losses after Trump posted that the call was "very good" and "came out very positively for both countries." The Bloomberg Dollar Spot Index pared earlier losses.

The US president did not say whether Beijing had agreed to expedite export licenses on magnets, which are essential to a wide range of key American products. Questions also remain about what, if anything, Trump conceded to Xi.

The Chinese leader said Beijing has complied with the terms of a tariff truce the two countries agreed to last month in Geneva, according to a statement from China's Foreign Ministry, even as U.S. officials have complained that export controls on rare earths have not been lifted quickly enough.

The Chinese statement said Trump told Xi that Chinese students are welcome to study in the U.S. The president's administration has taken steps to block foreigners from obtaining visas to study at U.S. universities. "Chinese students will come. No problem. No problem. It's our honor to have them," Trump told reporters.

Additional negotiations, Trump said, would happen "very soon" and involve U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer.

Trump said the hour-and-a-half conversation focused almost entirely on trade, although the Chinese statement indicated Xi had warned Trump about Taiwan after reports that the U.S. was ramping up arms shipments there.

China has also been more aggressive on trade, with its statement saying Xi urged Trump to remove "negative" actions that have rocked relations.

Xi also said the countries should work to reduce misunderstandings and that Trump was welcome to visit China, the statement said. Trump posted that he "reciprocated" an invitation for Xi to visit the U.S. and later said he would travel to China with first lady Melania Trump, but did not say when.

Relations between the rivals have deteriorated in recent weeks, with both sides accusing each other of violating a trade truce that lowered tariffs from record highs. China's Foreign Ministry previously said the call was initiated at Trump's request. With the new conflict threatening a fragile détente, market analysts had hoped the conversation would pave the way for a trade settlement.

The call between the leaders marked their first known formal contact since Trump took office. The last conversation between Trump and Xi was in January before the U.S. presidential inauguration. Rare earths have emerged in recent days as a major flashpoint. The U.S. has accused China of reneging on promises to ease export controls on the metals needed for advanced electronics. Beijing has been frustrated by new U.S. restrictions on the sale of chip design software and plans to begin revoking visas for Chinese students.

Trump has long said that direct talks with Xi are the only way to resolve differences between the two countries, but the Chinese leader has so far been reluctant to speak on the phone with his American counterpart — preferring to let advisers hash out key issues. (alg)

Source: Bloomberg