Trump to speak with China's Xi after hiking tariffs, White House says

Trump backed away from his threat to impose steep tariffs on Mexico and Canada on Monday, but U.S. tariffs on China were still due to take effect within hours.

U.S. President Donald Trump will speak with Chinese President Xi Jinping as soon as this week, Trump's spokesperson said, setting up a major diplomatic exchange as the world's two largest economies seek a deal that could avert a broader trade war.

Trump on Saturday ordered sweeping tariffs on goods from Mexico, Canada and China, as part of demands they stanch the flow of illegal fentanyl, a leading cause of drug overdoses in the United States.

Trump backed away from his threat to impose steep tariffs on Mexico and Canada on Monday, but U.S. tariffs on China were still due to take effect within hours.

The call will be Trump and Xi's first known talks since Trump took office on Jan. 20. They previously spoke before Trump's inauguration.

"It'll happen in the next couple of days," White House press secretary Karoline Leavitt said of the latest call.

On Monday, the Republican president threatened to ramp up tariffs on China. He imposed a 10% duty on all their goods on Saturday that are set to take effect on Tuesday.

Those tariffs stopped short of Trump's campaign promises for steeper tariffs of 60% on Chinese goods. On Monday, he described the initial tranche as an "opening salvo."

The U.S. has said China is the primary source of the precursor chemicals synthesized into fentanyl by drug cartels in Mexico. China says it has taken significant steps to crack down on the chemicals and touted measures to cut down on the illicit drug trade.

"China hopefully is going to stop sending us fentanyl, and if they're not, the tariffs are going to go substantially higher," said Trump. "China will be dealt with," he added.

China, which has long called tariffs counterproductive, offered relatively muted criticism of the tariffs and signaled an openness to talks.

The country's government appeared poised to seek a deal with Trump that could delay or stop tariffs, according to a person familiar with the matter.

The U.S. dollar hit a record high against the Chinese yuan traded offshore and was hovering near those levels on Monday.