US and China Hunker Down for All Important Trade Talks

Top US officials met their Chinese counterparts in London this week in a renewed push to stabilize trade relations between the world’s two largest economies. 

With Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent, and Trade Representative Jamieson Greer leading the US side, the talks focused heavily on rare earth exports and the high-stakes semiconductor trade. China’s Vice Premier He Lifeng was among the top names on the Chinese delegation.

These negotiations come after a May truce in Switzerland brought some relief. US tariffs on Chinese goods dropped from a peak of 145% in April to 30%, while China reduced its retaliatory duties from 125% to 10%. Both sides agreed to a 90-day cooling-off period, but friction remains. 

Washington accuses Beijing of failing to lift restrictions on rare earth magnet exports. Meanwhile, China says the US is backtracking by blocking sales of chip design software and restricting Huawei-related imports.

Rare earths remain a core issue. China accounts for nearly 70% of global supply, and their strategic importance in US manufacturing, from smartphones to electric vehicles, cannot be overstated. Trump claims Xi has agreed to resume trade in these materials, but US officials suggest the pace of exports remains below expectations.

What Does This Mean for Me?

Talks follow a direct call last week between Trump and Xi, their first since the trade war began in February. While Trump called it a productive conversation, fresh data from Beijing hints at underlying strains. Chinese exports rose 4.8% year-on-year in May, but imports fell by 3.4%, missing expectations and signaling weaker domestic demand.