President Biden and Chinese President Xi Jinping reportedly spoke on the phone on Tuesday in talks to defuse tensions, including US lawmakers' proposed ban of popular social media app TikTok

Yahoo Finance's Rick Newman highlights central points of contention between the US and China, expanding on Biden's perspective on Chinese tariffs as former President Trump pushes for more in his re-election campaign.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

- President Biden and Chinese President Xi Jinping spoke earlier today over the phone for the first time since November. Conversation comes amid ongoing efforts to defuse tensions between the two nations with more on what was discussed and why it matters. Yahoo Finance's very own Rick Newman. Rick, what was discussed?

RICK NEWMAN: I wish I had been on the call. President Biden just said how things are going. I'm just calling to check in. By the way, when are you planning on invading Taiwan? Just between us. Well, one thing we know they discussed is TikTok. I mean, there's this-- the House says here in the United States has passed a bill that would force--

- 50-to-0.

RICK NEWMAN: --the divestiture.

- 50-to-0.

RICK NEWMAN: So force the divestiture of TikTok, or else, ban it in the United States. Now it's not clear that's going to get through the Senate. But this issue has legs. I mean, there's a lot of interest in that. I think President Biden is clear. He's focusing on divestment, not on banning the app. They just want somebody to own it that's not based in China. So basically selling it. There are all kinds of other issues going on. I mean, Janet Yellen, the Treasury Secretary, is going over there.

She has said recently that she is concerned about overproduction in China of a lot of things that are now trying to export and concerns that they're actually dumping cars, electric vehicle technology, solar panels, other stuff, just basically dumping this on the global market at below-market prices, which China has done. I mean they can't consume everything they're producing in China. So there's a lot of that. Concerns about Chinese-made electric vehicles and components coming here to the United States.

They would they'd be there'd be a tariff on those to come in, but they could be coming here and even with tariffs could undercut American products. China is helping Russia in its war against Ukraine. It's not providing a lot of military assistance. But it is backfilling a lot of the stuff that Russia can no longer get because of Western sanctions. So there's a whole long menu of issues between these two countries.

- So it's positive that they're talking again.

RICK NEWMAN: Sure.

- But there's still a lot of points of tension. We've been talking more and more about the upcoming presidential election, and we were just talking in the break, trying to understand the difference and we know about a China policy from President Biden, which is more of a known quantity and the rhetoric we've heard from a potential president, Trump.

RICK NEWMAN: Well, Trump is also kind of a known quantity because we know what he did with regard to China when he was in the White House. He imposed those tariffs on about half of all Chinese imports, which are still there. Biden left those in place. So how would they differ in 2025 to 2029? Trump is saying very clearly he wants more tariffs on Chinese imports. And the way I see people characterize-- I mean, this could be Trump is talking about new imports of up to 60% on Chinese imports.

The ones he put in place before were only in the range of 10% to 25%. So that would be a big deal and the way that I see people framing this is that Trump would really like to decouple the two economies, which is to break what are very strong bonds between these two economies right now. And Biden doesn't really want to do that. He wants to manage certain parts of the relationship. He wants some supply chains to come back to the United States. But I mean, if you look at the trade data, I mean, we are still importing tons of stuff from China.

That stuff has contributed to deflation or low inflation for a long time. And obviously, now we have an bit of an inflation problem. So the analysts I'm seeing are saying if Trump actually got elected, and he did some of the things he's talking about, it would be inflationary. It would have the effect of pushing some prices up, and that is harder to do. This is the wrong time to do that. I mean, it was different when he started in 2018.

- Well that's what I wanted to ask you about. Just very quickly following up, because I remember when we talked about this before when he was threatening and then enacted those initial tariffs, and that was the prediction then that it was going to cause inflation. Of course, then the pandemic happened. So it screwed up the whole calculus. But did it have that effect? Did it initially push prices up?

RICK NEWMAN: So Trump was actually concerned about that, and here's how we know-- the tariffs that he did impose on Chinese imports were mostly on component products. So they were not finished products for the most part that were coming here straight to consumers. They were not computers. They were not electronic gadgets. It was componentry that went into the supply chain. So it was buyers and manufacturers and producers here that were buying those components, and then they had to figure out how to deal with the higher costs.

So he very carefully and deliberately did not impose-- he exempted finished consumer goods, most finished consumer goods from tariffs because if he didn't, those price hikes would have just shown up right in the price tag of those products, and by the way, Trump kept telling us Americans don't pay the tariffs. Chinese pay the tariffs that is completely wrong. The tariff is assessed when it comes into the United States, the tariff revenue actually goes to the Treasury, and it does lead to higher prices here. So he hid that inflation to the extent there was, and he put the burden on producers to figure out what to do with those prices, and then COVID hit. So it's a little bit hard to disentangle. But two years from now would not be the right time to do something inflationary.