[WASHINGTON] Top trade negotiators from the US and China are set to hold fresh talks in London on Monday (Jun 9), offering a glimmer of hope that the world’s two largest economies can defuse tensions over Chinese dominance in rare-earth minerals.
Both sides have accused the other of reneging on a deal in Geneva in May where they tried to start dialling back their trade war. Relations have spiralled since US President Donald Trump’s return to the White House, stoking uncertainty for companies and investors.
China said on Saturday it approved some applications for rare-earth exports, without specifying which countries or industries were involved – after Trump said on Friday that Chinese President Xi Jinping had agreed to restart the flow of minerals and magnets using the materials.
“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 on Sunday on CBS’s Face the Nation. “And that’s clear to them.”
US-China trade tensions escalated this year as a series of duty hikes on each other’s goods sent tariffs well above 100 per cent before hitting a pause. While the Geneva deal was meant to pave the way for a broader de-escalation, subsequent talks quickly stalled amid mutual recriminations.
The US complained about a decline in shipments of rare-earth magnets essential for American electric vehicles and defence systems, while China bristled at tightened US restrictions on artificial intelligence chips from Huawei Technologies, access to other advanced technologies and crackdowns on foreign students in the US.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Trump’s reprieve on US tariffs for Chinese goods runs out in August, unless he decides to extend it. If deals aren’t reached, the White House has said Trump plans to restore tariff rates to the levels he first announced in April, or lower numbers that exceed the current 10 per cent baseline.
In London, US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer will meet a Chinese delegation led by Vice-Premier He Lifeng.
Trump offered a positive spin on what has been a rollercoaster relationship since he took office in January, saying on social media that the talks should go “very well”.
While a call between Trump and Xi last week generated some hope on Wall Street for lower duties between the trading partners, investors’ optimism was limited. While promising to reshape US trading relationships, the US president has reached only one new trade agreement – with the UK.
The Geneva meeting underscored the challenge of deal-making between China and the US.
“There was confusion and misunderstanding or misinterpretation intentionally on both sides, depending on how you look at it, about what was agreed to,” said Josh Lipsky, chair of international economics at the Atlantic Council.
“They left too many things open to interpretation and they all paid the price for it in the intervening weeks.”
After the two leaders spoke, the Chinese Foreign Ministry said Trump told Xi that Chinese students are welcome to study in the US. Trump later said it would be his “honour” to welcome them.
For now, Xi appears to be betting that a reset in ties will lead to tangible wins in the weeks and months ahead, including tariff reductions, an easing of export controls and a less fraught tone.
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”, Lipsky said. BLOOMBERG
