The United States and China have reached an initial agreement on a plan to ease trade tensions, which could restore the flow of sensitive goods between the world’s two largest economies.
Chinese and US negotiators in London said that the two sides have reached a framework agreement on how to implement the consensus reached in the previous round of Geneva talks.
China’s chief trade negotiator Li Chenggang said that the US and Chinese delegations will now submit the proposal to their respective leaders.
Although the full details of the agreement have not been immediately disclosed, US negotiators said they are “absolutely looking forward” to the resolution of the issue regarding the transportation of rare earth minerals and magnets.
After two days of discussions lasting nearly 20 hours in a Georgian mansion near Buckingham Palace in London, US Commerce Secretary Howard Lutnick told reporters, “Once the two presidents approve, we will seek to implement it.”
U.S. Trade Representative Jamie H. Gale said there were no other meetings scheduled, but added that the United States and China often engage in dialogue and can do so when necessary.
This London meeting was held at the urging of the Trump administration, aiming to solidify the Chinese government’s commitment to ease rare earth exports made during last month’s Geneva trade talks, which ultimately led to a tariff truce.
Disputes over the export of key minerals have once again sparked an open economic conflict between China and the United States, increasing the possibility of the breakdown of the agreement just reached by the two countries, which will pose a new threat to the world economy.
Lutnick said, “We do hope that the issue of rare earth minerals and magnets in the United States will be addressed in the implementation of this framework.”
“Furthermore, when these rare earth supplies were insufficient, the United States took a series of measures,” Lutnick added. “You should expect these measures to be gradually lifted – as President Trump said, in a balanced way. When they approve licenses, you should expect our export enforcement to also decline.”
The Ministry of Foreign Affairs and the Ministry of Commerce of China did not immediately respond to requests for comment.
Greer said that the fentanyl issue is also a priority for the US president. The Trump administration once imposed tariffs on China on this ground. “We look forward to seeing significant progress from China on this issue.”
The London conference highlighted the increasingly important role of export controls in modern trade wars. In such wars, obtaining rare minerals or microchips can give an economy a huge competitive edge. China controls a large share of the global raw materials used to make magnets, as well as other inputs needed for advanced manufacturing such as electric vehicles, lasers and mobile phones.
The US has accused Beijing of delaying sales, although the delay might be due to the lengthy approval process under China’s regulatory system. European trade officials and automakers have also issued warnings about disruptions in supply from China.
In response, Washington took action last month to restrict the export of chip design software, jet engine parts, chemicals and nuclear materials – the US opened the door to lifting these restrictions at the London meeting in exchange for exemptions on rare earths. The 90-day grace period for the tit-for-tat tariffs imposed by the United States and China on each other has passed about one-third. These tariffs took effect in April. The settlement agreement announced in Geneva on May 12th significantly reduced these tariffs, but trade between the two major economies is still disrupted.
According to calculations by Bloomberg News, China’s exports to the United States dropped by 34% in May, the biggest decline since February 2020 when the first wave of the coronavirus pandemic brought China’s economy to a standstill.
Joseph Gregory Mahoney, a professor of international relations at East China Normal University in Shanghai, said that the biggest victim of the trade war is not the loss of sales but the loss of trust. China is very cautious and aims to avoid being drawn into Trump’s “circus”.
“We have heard a lot about the framework agreement for negotiations. But the fundamental issues remain: chips and rare earths,” he said. “Everything else is just empty talk.”
