I considered a possibility that he says that Taiwan is the real Chinese government. It seems too unlikely.
I think it's more likely that he's just lying entirely to save face. He realized that China isn't going to negotiate but the tariffs are hurting the US. So he drops the tariffs and pretends he came to a great deal.
Third possible scenario. He says that he's negotiating with China. Trump doesn't lift the tariffs. He says that China won't come to a deal. US goes into a recession. Trump blames China for the recession.
Surely it can't be a coincidence that CIA decided to publish this on International Labor Day. I was reading the Chinese MFA this morning for news updates and it said they were closed for the national holiday.
Also this seems to confirm that there isn't ever going to be tariff negotiations. Why should China do trade negotiations with a country that is trying to install spies?