Trade War Ceasefire? US-China Talks Enter Day 2 with Rare Earth Metals in Focus

Talks between the US and China are expected to resume in London on Tuesday at 10 am local time, according AFP. Top leaders from the world's two largest economies met on Monday at the historic Lancaster House, following an earlier round of trade talks in Geneva last month. Discussions between the US and China are underway to strengthen a temporary 90-day trade agreement that has raised global economic concerns.

Chinese Vice Premier He Lifeng once again led the delegation in London, accompanied by Commerce Minister Wang Wentao and China’s International Trade Representative Li Chenggang. On the US side, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer spearheaded the American team.

Following the Geneva discussions, both countries have reduced their tit-for-tat tariffs imposed on each other, which earlier crossed above 100% mark. As per the trade truce of 90 days, the US temporarily lowered its tariffs on Chinese goods from 145% to 30%, while China cut its levies on American imports from 125% to 10%.

US President Donald Trump spoke with Chinese leader Xi Jinping over the phone last Thursday in an attempt to put relations back on track. Trump posted on his social media platform, Truth Social, the next day that trade talks would be held on Monday in London. However, the UK government clarified that it is only providing the venue and logistics and is not involved in the talks.

On Saturday, following Trump's call, Beijing appeared to send conciliatory signals. “China is willing to further enhance communication and dialogue with relevant countries regarding export controls to facilitate compliant trade,” said a spokesperson for China’s commerce ministry.

Key Discussions

A key flashpoint in the London talks is China’s April move to impose licensing requirements on exports of seven rare earth elements—materials vital to automakers and the tech industry. The decision has raised concerns in the West, as global stockpiles have tightened, alarming manufacturers in Europe and the US. The negotiations are further clouded by ongoing tensions over semiconductors, artificial intelligence technologies, and curbs on Chinese students at American universities.

Kevin Hassett, director of the National Economic Council, told CNBC Monday that the US may be open to loosening restrictions on some microchips that China views as critical to its manufacturing sector. He also noted that the US will maintain restrictions on “very, very high-end Nvidia” chips that are capable of powering artificial intelligence systems.