US, China to resume trade talks in London as rare-earth, tech tensions persist: the story so far

The United States and China are set to reopen high-stakes trade negotiations in London on Monday, aiming to revive a fragile truce on tariffs and technology restrictions after weeks of recriminations.

The meeting follows a phone call last week between President Donald Trump and Chinese leader Xi Jinping that both sides described as constructive.

The renewed dialogue is focused on easing export controls and restoring the flow of critical materials, particularly rare-earth minerals, after a breakdown in talks that began in Geneva last month.

Since then, relations between the world’s two largest economies have soured, with the US accusing China of withholding key exports, and Beijing bristling at Washington’s clampdown on advanced technology.

Momentum builds after Trump-Xi call

Trump’s phone conversation with Xi last Thursday marked the first direct contact between the leaders since the trade war reignited in February.

The new round of negotiations came after Trump said his phone conversation with Xi on Thursday mainly focused on trade and had “resulted in a very positive conclusion for both countries”.

China, in turn, announced that Vice Premier He Lifeng would travel to the UK from June 8 to 13 for discussions under the “China-US economic and trade mechanism.”

Over the weekend, Beijing also approved certain applications for rare-earth exports, though it stopped short of disclosing details about the recipients.

Kevin Hassett, head of the National Economic Council, emphasized that the US wants a swift return to normal trade in rare earths.

“We want the rare earths, the magnets that are crucial for cell phones and everything else to flow just as they did before the beginning of April, and we don’t want any technical details slowing that down,” Kevin Hassett, head of the National Economic Council at the White House, said Sunday on CBS’s Face the Nation.

“And that’s clear to them.”

Stumbling blocks remain after Geneva deal falters

In May, both countries struck a tentative agreement in Geneva to temporarily lower tariffs that had risen to over 100%.

However, talks soon stalled, with each side accusing the other of backtracking.

The US was particularly alarmed by a drop in rare-earth magnet shipments used in electric vehicles and military hardware.

China, meanwhile, protested new American restrictions on AI chips, chip design software, and visa curbs affecting over 280,000 Chinese students.

Monday’s negotiations in London will bring together US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer.

Their Chinese counterparts will be led by Vice Premier He.

Observers note the presence of Lutnick — key architect of technology export curbs — as a sign the White House is open to revisiting measures that have rattled Beijing’s economic ambitions.

Uncertain path to progress as tariffs loom

Although Wall Street responded with guarded optimism following the Trump-Xi call, few expect a breakthrough.

Analysts at Bloomberg Economics cautioned that unlike the Geneva talks, there’s no urgency to reduce tariff levels and the talks are likely to be bogged down by thornier issues.

“This time around there’s no such low-hanging fruit,” Adam Farrar and Michael Deng of Bloomberg Economics wrote in a report ahead of the talks, the publication said.

“With more complex issues on the table, it will be harder for either side to walk away with meaningful new outcomes.”

The White House has hinted that if no deal materializes, Trump will reinstate higher tariffs in August.

That would mark a return to the more punitive duties announced in April, reversing the temporary reprieve granted after the Geneva framework.

China’s official tone has softened, with a Xinhua commentary urging the US to abandon its “security lens” on economic issues.

Still, it acknowledged that both nations share “extensive common interests” and called the economic relationship one of “mutual benefit and win-win results.”

Economic pressures on both sides

Behind the negotiating table, domestic pressures weigh on both leaders.

Trump, seeking re-election, is eager to show progress on trade.

Xi, facing economic headwinds ranging from deflation to youth unemployment, also has incentives to stabilize relations.

Despite tightening rare-earth exports, China appears open to engagement, with Xi reportedly telling Trump that he hopes to see the US “withdraw the negative measures it has taken.”

After their call, China’s foreign ministry said Trump extended a welcome to Chinese students — a gesture seen as symbolic amid broader tensions.

“It would be my honor to welcome them,” Trump later said.

Still, as the London talks begin, seasoned observers remain cautious.

“The US and China “just want to get back to where they were in Switzerland with a few more agreements down on paper to actually understand what is gonna be licensed, what gets permitted, what doesn’t,” said Josh Lipsky of the Atlantic Council.

Whether that clarity emerges in London remains to be seen.

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