U.S. and China Resume High-Stakes Trade Talks in London Amid Rare Earths Dispute

U.S. and Chinese officials reconvened in London on Tuesday for a second day of trade talks, with global markets closely watching for signs of a breakthrough. The discussions are focused on export controls, particularly concerning rare earth materials critical to high-tech and defense sectors. This diplomatic effort comes amid heightened tensions over China’s restrictions on exports vital to industries like automotive, aerospace, and semiconductors—moves Washington has accused Beijing of using as leverage.

The renewed negotiations follow a preliminary deal made in Geneva last month that initially eased investor concerns, but optimism waned when new allegations surfaced against China for blocking strategic exports. The talks take place at Lancaster House, a symbolic setting for high-level diplomacy, underscoring the gravity of the discussions. Officials from both sides are expected to issue formal statements after Tuesday’s sessions conclude.

Trade data underscores the urgency of these meetings, with China’s exports to the U.S. plunging by 34.5% in May—the steepest drop since the onset of the COVID-19 pandemic in early 2020. Despite limited immediate impact on U.S. inflation and employment, ongoing trade restrictions risk long-term economic consequences. The dollar continues to face pressure, reflecting investor uncertainty over American trade policy direction.

The U.S. delegation includes Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer. Lutnick’s presence is especially notable, as his department oversees American export controls and signals the centrality of rare earths in these negotiations. China, which dominates the global supply of rare earth magnets, sent Vice Premier He Lifeng and other senior officials, reinforcing the high priority both nations place on this issue.

The London meetings follow a phone conversation between President Donald Trump and Chinese President Xi Jinping last week—their first since Trump’s January inauguration. Trump announced afterward that China had agreed to resume shipments of rare earth minerals to the U.S., a gesture confirmed by Reuters reports that Beijing had granted temporary export licenses to major American automakers. Whether these steps signal lasting cooperation or a temporary reprieve remains to be seen as the second day of talks unfolds.

Source: Reuters