Senior U.S. and Chinese officials are set to resume high-stakes trade negotiations in London on Tuesday, focusing on critical export controls that have shaken global supply chains and heightened fears of economic slowdown.
The second day of talks at Lancaster House follows Monday’s tense discussions, as both sides seek to resolve lingering disputes from a preliminary trade deal reached in Geneva last month. The agreement had initially eased investor concerns, but optimism faded after Washington accused Beijing of blocking exports of key industrial materials.
At the heart of the negotiations are rare earth elements, vital to sectors such as electric vehicles, aerospace, semiconductors, and defense, where China maintains a near-monopoly. The inclusion of U.S. Commerce Secretary Howard Lutnick, whose department manages export controls, underscores the centrality of this issue.
Joining Lutnick are Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer. The Chinese delegation is led by Vice Premier He Lifeng, reflecting the high-level engagement both countries are investing in the talks.
The renewed discussions come at a crucial moment. Chinese exports to the U.S. fell sharply in May, plunging 34.5%, the steepest drop since February 2020, when COVID-19 disrupted global commerce. While the U.S. economy has so far shown resilience, with inflation and job markets relatively steady, the dollar remains under pressure amid policy uncertainty.
Tensions remain elevated despite a phone call last week between U.S. President Donald Trump and Chinese President Xi Jinping, marking their first direct conversation since Trump’s inauguration on January 20. Following the call, Trump announced that China had agreed to resume rare earth shipments, and Reuters reported temporary export licenses had been issued to suppliers for major U.S. automakers.
Still, industry leaders worldwide remain anxious. Shortages of rare earth materials have already led some manufacturers to warn of potential production slowdowns if supply disruptions persist.
Both delegations are expected to issue statements following the conclusion of Tuesday’s talks, with global markets closely watching for signs of a breakthrough, or further escalation.
Written By Rodney Mbua
