Consumer prices fell for the third month in a row as China grapples with serious deflation due to President Trump’s “reciprocal” tariffs.
The consumer price index fell 0.1% in April, following the same drop in March. The producer price index also fell 2.7% in April year or year, from a 2.5% decrease in March.
In recent weeks, there have been clear indications that China is willing to come to the table and negotiate new trade terms with the US, after initially taking a hardline stance in response to President Trump’s new tariffs. Beijing immediately slapped the US with increased tariffs of its own and also put a tight squeeze on the supply of rare-earth minerals and magnets, whose global supply China almost entirely controls.
A statement issued by the Chinese Commerce Ministry just over a week ago appears to mark a shift in tone and a willingness to negotiate, after China initially took a hard line and responded with tariffs and restrictions of its own.
“The U.S. has recently taken the initiative on many occasions to convey information to China through relevant parties, saying it hopes to talk with China,” the statement said, adding that the Chinese government was “evaluating this.”
The statement warned, however, that “attempting to use talks as a pretext to engage in coercion and extortion would not work.”
President Trump has made China the main target of his “reciprocal tariffs,” which were announced at the beginning of last month. The President quickly relaxed his new tariffs on other nations to allow them time to negotiate new trade deals, but maintained duties of 145% on goods from China, with some exceptions.
Beijing has described the tariffs as “bullying,” and imposed its own duties in response, as well as squeezing the supply of vital rare-earth metals and magnets, which it monopolises.
President Trump has said there is a “very good chance” he can reach a deal with Beijing.
Treasury Secretary Scott Bessent and White House economic adviser Kevin Hassett have also expressed hope for progress in easing trade tensions.
“I am confident that the Chinese will want to reach a deal. And as I said, this is going to be a multi-step process. First, we need to de-escalate, and then … we will start focusing on a larger trade deal,” Bessent said in an interview with Fox Business Network this week.