US-China Trade Talks Resume in London Amid Tensions Over Rare Earths and Tech Access

Watan-A new round of trade negotiations between the United States and China began Monday in London, held behind closed doors at the historic Lancaster House, following a temporary tariff reduction agreement reached last month in Geneva.

The high-level talks are expected to last two days. The US delegation is led by Treasury Secretary Scott Besant, Commerce Secretary Howard Lutnick, and White House Trade Representative Jamieson Greer. The Chinese side is led by Vice Premier He Lifeng, who officially opened the meeting, according to Xinhua News Agency.

Markets are watching the outcome closely. However, analysts expect fewer breakthroughs compared to Geneva, where both countries agreed to significantly reduce mutual tariffs for 90 days. Ian Bremmer, president of the Eurasia Group, stated that while a temporary truce is possible, a constructive long-term relationship is unlikely due to broader decoupling trends and continued US pressure on allies to sideline China from supply chains.

Neither Washington nor Beijing disclosed details of the meeting’s progress as of Monday morning. Former President Donald Trump wrote on Truth Social that he expects a “very good meeting.” A UK government spokesperson confirmed that Britain is not participating in the talks but emphasized the importance of free trade and warned that trade wars benefit no one.

Rare Earths Dominate the Agenda

The London talks follow a phone call last Thursday between Trump and Chinese President Xi Jinping, which Trump described as “very positive.” Xi urged a course correction in the “giant ship of US-China relations.” Yet tensions escalated again last week when Trump accused China of violating the Geneva agreement.

White House Press Secretary Caroline Leavitt said Sunday: “We hope China honors its side of the deal. That’s the main focus of our team in London.”

Top of the agenda is China’s rare earth mineral exports, which have slowed in recent years despite being vital to electric vehicle batteries and other high-tech industries. Kathleen Brooks of XTB told AFP that the US wants China to restore normal export flows, while Beijing seeks easing of restrictions on students, tech access, and advanced processors.

US Economic Advisor Kevin Hassett confirmed Monday that Washington is seeking “firm commitments” on rare earths, adding that if progress is made, export controls could be relaxed and shipments accelerated.

Trade Volumes Fall Despite Tariff Truce

While the Geneva deal reduced US tariffs on Chinese goods from 145% to 30% and China’s tariffs on American goods from 125% to 10% for 90 days, trade volumes remain low. Chinese exports to the US dropped by 12.7% in May, down to $28.8 billion, according to official data.

Customs figures show a year-on-year decline of 34.5% in Chinese exports to the US in May—the steepest drop since February 2020 during the COVID-19 outbreak.

In the US, the trade war hit consumer and business sentiment. While GDP shrank in Q1 due to soaring imports ahead of expected price hikes, inflationary pressure has since eased, and the labor market remains stable. Economists warn, however, that greater economic strain may become visible this summer.

China Seeks Global Trade Rebalancing

As it navigates strained ties with Washington, China is deepening talks with other global partners, startinig with key Asian allies like Japan and South Korea. Beijing also contacted Canada, aiming to reopen dialogue between PM Li Qiang and PM Mark Carney, despite tensions dating back to Huawei’s 2018 arrest.

Beijing also proposed creating a “green channel” for rare earth exports to the EU, pledging to expedite approvals for compliant applications—an offer timed ahead of a key EU-China summit in July.

UK Chancellor Rachel Reeves reportedly met with Scott Besant and He Lifeng in London on Sunday, signaling London’s diplomatic engagement on the economic sidelines of the bilateral summit.