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 he 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.