US-China Trade Talks Resume in London Amid Rare Earths Export Tensions

The meeting comes against a backdrop of increasing trade hostility and heightened geopolitical tension, particularly around China’s tight grip on the supply of critical minerals.

The immediate concern for the US side is the flow of rare-earth minerals and magnets—materials that are key components in smartphones, electric vehicles, and military systems.

Source : Freepik

Trade negotiators from the United States and China are expected to reconvene in London on Monday, rekindling efforts to ease the friction that has built up over rare earth exports.

The meeting comes against a backdrop of increasing trade hostility and heightened geopolitical tension, particularly around China’s tight grip on the supply of critical minerals, reported Bloomberg.

While the Geneva discussions in May were supposed to mark the beginning of a thaw in trade relations, both Washington and Beijing have since accused each other of backing out of the tentative agreements. These strained relations have only worsened since President Donald Trump returned to the White House, contributing to growing concerns among global investors and corporations.

Rare Earths in Focus as Tensions Simmer

The immediate concern for the US side is the flow of rare-earth minerals and magnets—materials that are key components in smartphones, electric vehicles, and military systems. Beijing’s recent move to approve certain export applications, without disclosing the recipients or industries, came after Trump claimed that Chinese President Xi Jinping had agreed to resume shipments.

“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,” said Kevin Hassett, who heads the White House’s National Economic Council, during an interview on CBS’s Face the Nation.

The dispute has deepened over the past year, as both sides implemented a series of tariff hikes, pushing duties to over 100 per cent before the Geneva pause. The US has voiced frustration over shrinking supplies of rare-earth magnets, while China has pushed back against tightened American restrictions on AI chips from Huawei Technologies Co., limits on technology access, and a crackdown on Chinese students in US universities.

High Stakes Talks and Unresolved Disagreements

The US trade reprieve, which temporarily suspends higher tariffs on Chinese imports, is set to expire in August unless President Trump opts for an extension. Should talks fail to yield a concrete agreement, the White House has warned that tariffs may revert to levels previously announced in April, higher than the current 10 per cent baseline.

In London, the US team will include Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer. They will engage with a Chinese delegation headed by Vice Premier He Lifeng.

Trump, maintaining an upbeat tone despite the uncertainty, wrote on social media that the talks should go “very well.” A recent call between Trump and Xi helped briefly lift sentiment on Wall Street, though any optimism was quickly tempered by scepticism over whether actual progress would be made. Since taking office in January, Trump has managed to finalise only one new trade agreement, struck with the UK.

The Geneva round highlighted just how difficult it is to reach mutual understanding between the two countries. “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.”

Path Forward: Clarity and Compromise

Following their phone conversation, China’s Foreign Ministry said Trump assured Xi that Chinese students remain welcome in the US. Trump later affirmed that sentiment, saying it would be his “honour” to host them.

Looking ahead, Beijing appears hopeful that a renewed diplomatic track can bring about meaningful outcomes, such as lowering tariffs, loosening export restrictions, and creating a more stable tone in bilateral communications.

As Lipsky put it, both sides are now aiming “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.”