China's top trade negotiator Liu He will meet with President Donald Trump's trade team on Thursday without the title "special envoy" for President Xi Jinping, a role he has held in previous talks, suggesting the vice premier may have diminished authority to make concessions that could be key to striking a deal.
A source on the Chinese side told CNBC's Eunice Yoon that Liu's demotion suggests that he may not have much leeway to make compromises on his own.
That could leave negotiations to happen at a higher level. On Thursday afternoon, Trump said that Xi had written him a "beautiful letter" that he had "just received," and said and will probably speak to Xi by phone.
The news of Liu's title change comes as Washington and Beijing wrestle over the contours of a trade deal that has faced a number of setbacks in recent days.
Trump over the weekend set a Friday deadline to more than double the rate for existing tariffs on $200 billion in Chinese goods, a turnaround after weeks in which the administration signaled that negotiations were moving forward.
U.S. Trade Representative Robert Lighthizer and other officials are scheduled to meet with Liu for dinner just hours before those tariffs are set to take effect.
Stocks continued to tumble Thursday after Trump said at a rally the night before that China "broke the deal" and reiterated his tariff threats. Meanwhile, China has signaled it is unlikely to back down in the face of American pressure.
Part of the China's calculus has involved the suspicion that Trump's public pressuring of Federal Reserve Chairman Jerome Powell to lower the central bank's benchmark interest rate is motivated by his belief that the U.S. economy is weaker than he has claimed, The Wall Street Journal reported.
China backtracked on nearly every commitment that it had made in previous negotiations in a diplomatic cable sent Friday, according to Reuters.
In response, on Sunday, Trump issued his threat to raise tariffs on the country in a post on Twitter.
"The Trade Deal with China continues, but too slowly, as they attempt to renegotiate," Trump wrote. "No!"
Trump tweet
via IFTTT
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