Financial markets greeted the news with relief Tuesday. The Dow Jones Industrial Average closed 1.4% higher, adding 353 points.
Investors have been on edge since the world's two biggest economies last month broke off talks aimed at settling a dispute over U.S. allegations that China steals technologies and forces foreign companies to hand over trade secrets. The U.S. says the predatory tactics are part of Beijing's aggressive drive to supplant American technological dominance.
Trump has already imposed 25% tariffs on $250 billion in Chinese imports. And he's preparing to target the $300 billion in Chinese imports that he hasn't already hit with tariffs, extending them to everything China ships to the United States. China has retaliated with tariffs on U.S. goods.
"Had a very good telephone conversation with President Xi of China," Trump tweeted. "We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting."
The White House said in a statement that the two leaders discussed leveling the playing field for U.S. farmers, workers and businesses through a "fair and reciprocal" economic relationship. The White House said that includes addressing barriers to trade with China and achieving meaningful reforms that can be verified and enforced.
Departing the White House for a campaign rally in Orlando, Florida, Trump said "our people are starting to deal as of tomorrow. The teams, they're starting to deal." The administration provided no details about talks between the negotiating teams.
One of Trump's top economic advisers, Larry Kudlow, would not speculate on what will happen at the Trump-Xi meeting on the sidelines of the G-20.
"Talk is better than no talk," said Kudlow, director of the National Economic Council.
He said the administration will push China to make fundamental changes to its economic policies.
"We want structural changes on all the items — theft of (intellectual property), forced transfer of technology, cyber hacking, of course trade barriers," he said. "We've got to have something that's enforceable."
Appearing before the Senate Finance Committee Tuesday, Trump's top trade negotiator sounded a cautious note.
"I can't predict what the United States is going to do or whether we're going to be able to resolve this issue with China," U.S. Trade Representative Robert Lighthizer said. "My hope is that we can."
The two countries each have an incentive to reach a deal.
China is contending with a decelerating economy, high debts and consumer worries about the impact of Trump's tariffs.
"The time may be ripe for China to make strong enforceable commitments on intellectual property and technology transfer," said Dean Pinkert, a partner at the law firm Hughes Hubbard & Reed and a former member of the U.S. International Trade Commission.
U.S. businesses are imploring Trump not to expand his tariffs to $300 billion in goods from China or at least spare those imports that are of key importance to their customers.
"I don't know if it'll get them to stop cheating, tariffs alone," Lighthizer told senators. But he added: "I don't think you have any other option. I know what won't work, and that is talking to them because we've done that for 20 years .... If there's a better idea than tariffs, I'd like to hear it."