Trade negotiations between the United States and China are underway in London, with discussions set to continue into tomorrow. The talks aim to maintain a delicate truce established last month following rising tensions that surfaced after a surprising agreement in Geneva. This fresh round of negotiations was prompted by a recent phone conversation between US President Donald Trump and Chinese President Xi Jinping, which seemed to alleviate some friction.
The primary agenda includes significant trade issues such as the rollback of tariffs on each other’s products, which initially created an optimistic atmosphere. However, concerns have rapidly emerged regarding two critical points: China’s dominance over rare earth minerals and its access to advanced semiconductor technology from the US.
Rare earths, essential components in numerous high-tech devices and military applications, will be a focal point at these negotiations. Experts believe that China will likely retain its control over these crucial minerals, which has increasingly become a tool for asserting its influence in international trade. Morgan Stanley’s chief economist for China indicated that America’s trade negotiations will hinge on China’s rare earth supply, describing it as a vital bargaining chip.
Since the Geneva discussions, Trump has accused China of restricting the export of these minerals and has announced additional restrictions on semiconductors, further straining relations. These actions have drawn sharp reactions from Beijing, which perceives them as breaches of earlier agreements.
Key members of the US team—including Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick—are set to engage with Chinese Vice Premier He Lifeng and his delegation. Reports suggest that the US negotiating team is considering easing certain export restrictions on technology, but it is likely to maintain safeguards on critical technologies that underpin its competitive edge against China.
In return for potential leniency, the US expects China to increase its exports of rare earth materials. There have been signs from China hinting at a willingness to cooperate, as a spokesperson stated that it had approved some compliant export licences.
Despite high expectations, the road ahead remains uncertain, with implications for both nations’ economies. Analysts caution that, even if diplomatic gestures are made, China may continue to restrict access to its rare earth supplies, leveraging this control amid ongoing trade disputes. Moreover, reports indicate a marked decline in Chinese exports to the US, highlighting the ongoing economic tensions between the two superpowers.
As negotiations progress, both parties remain under pressure to reach a consensus on these pivotal trade matters, which are influential not only for their respective economies but for the global market as well.