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Illustration: Sam Jayne/Axios

President Trump wants a grand bargain with China. And hardliners in the Trump administration worry Treasury Secretary Steven Mnuchin is leading him down an accommodationist path that — in their minds — would betray the President's economic agenda and capitulate to Beijing.

The intrigue: Trump inflamed those internal fears today with this tweet that signaled he's willing to give away significant things for a deal: "President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!"

Why it matters: Trump campaigned on an aggressive anti-China, economic nationalist platform. But his most bellicose threats — which include tariffs on $150 billion worth of Chinese products — may never eventuate, as his chief economic advisor Larry Kudlow signaled when he took over from Gary Cohn. (I originally wrote to take Kudlow's assurances with a grain of salt. But they've aged better than my expectation of a trade war.)

  • Trump is making a potentially stunning concession with ZTE. The Chinese telecommunications giant is fighting for its life. It’s been sanctioned for doing business with Iran and North Korea, and the U.S. Commerce Department banned American companies from selling it their products.

Between the lines: Senior Treasury and National Economic Council officials — including Mnuchin and Larry Kudlow, who recently returned from Beijing — are optimistic that Trump may cut a deal with China in the coming weeks.

  • Sources familiar with Mnuchin's thinking tell me he wants a deal that would have the Chinese buy billions of dollars worth of U.S. products. The idea would be to cut the trade deficit — something Trump is obsessed with — but trade experts say that purchasing products isn't the way to deal with profound structural imbalances.
  • In exchange, the U.S. would drop the section 301 tariffs designed to stop China from stealing American intellectual property and getting its hands on U.S. technology for nefarious purposes.

What's next: Vice Premier Liu He, who has been leading China's trade talks with the Trump administration, plans to visit Washington this week or next. His team has been in town the past two days preparing for the meeting.

  • The administration hasn't planned for Liu He to meet with President Trump, but two sources familiar with the talks speculate that Trump may not be able to help himself — he'll likely want to take over the negotiations and meet with Liu He in the Oval.

Go deeper

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Olympics dashboard

Silver medalist Lilly King of Team USA (left) embraces gold medalist Tatjana Schoenmaker of Team South Africa on the podium during the medal ceremony for the Women's 200m breaststroke final on July 30. Photo: Clive Rose/Getty Images

🥇 : U.S. gymnast Suni Lee wins gold in the women's individual all-around

🚣‍♀️: Team USA women's eight rowing fails to reach the podium

🤸🏾‍♀️: Simone Biles reacts to "love and support" after withdrawing from all-around gymnastics and team finals, citing her mental health

🏊: Olympic swimmer Ryan Murphy wins Silver in 200m

📷: In photos: Tokyo Olympics day 6 highlights

🗓: The Olympic events to watch today

🏃‍: Female Olympians push back against double standard in uniforms

Go deeper: Full Axios coverage

Former Michigan Sen. Carl Levin dies at 87

Sen. Carl Levin (D-MI) in 2014. He died Thursday. Photo: Win McNamee/Getty Images

Former U.S. Sen. Carl Levin (D-Mich.) died Thursday, his family and the Levin Center at Wayne Law — which bore his name — confirmed. He was 87.

Why it matters: The Detroit native served for 36 years in the U.S. Senate, serving twice as chairman of the Armed Services Committee and is credited with helping overturn the military's “Don’t Ask, Don’t Tell” rule.

Updated 6 hours ago - Politics & Policy

Military members will be included in Biden's new COVID guidance

Joe Biden. Photo: Anna Moneymaker/Getty Images

Members of the military will be required to get vaccinations or face regular testing, social distancing, mask mandates and restrictions on travel for work, the the Pentagon said on Thursday evening.

Why it matters: The policy was announced for federal workers and onsite contractors earlier on Thursday, part of several new Biden initiatives to get more Americans vaccinated and slow the spread of the Delta variant.