Top United States and Chinese officials resumed trade talks for a second consecutive day in London on Tuesday, in an effort to resolve escalating tensions over critical export controls — particularly concerning rare earth materials — which have threatened to disrupt global supply chains and weigh on economic growth.
The high-level negotiations are being held at Lancaster House, a historic diplomatic venue in the British capital. Tuesday’s talks follow a preliminary session on Monday, during which both sides sought to iron out disagreements stemming from a provisional trade agreement reached last month in Geneva.
The ongoing discussions are viewed as pivotal, especially as recent customs data from Beijing revealed that China’s exports to the US fell by a staggering 34.5% in May — the steepest monthly drop since February 2020, when the COVID-19 pandemic severely impacted global commerce.
Although the immediate effect on US inflation and employment figures appears contained, analysts say the dollar continues to come under pressure amid uncertainty over Washington’s trade policy direction.
The American delegation is being led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer. China’s team is headed by Vice Premier He Lifeng, a key figure in Beijing’s economic policymaking.
The presence of Commerce Secretary Lutnick — whose department oversees US export controls — underscores the centrality of rare earth materials to the talks. China maintains a near-monopoly over rare earth magnets, which are essential for electric vehicle (EV) motors, aerospace components, and other high-tech manufacturing.
Lutnick had not participated in the Geneva negotiations, where both sides agreed to a 90-day truce that included rolling back select tariffs. The Geneva agreement had initially buoyed markets, but optimism faded as the US accused China of imposing new informal barriers to rare earth shipments.
Tensions further escalated when factories around the globe began reporting shortages of essential materials, raising fears of production slowdowns in industries ranging from automobiles to semiconductors and defence.
The current round of talks follows a phone conversation between US President Donald Trump and Chinese President Xi Jinping last week — their first direct contact since Trump took office on January 20. According to US officials, Xi agreed during the call to resume exports of rare earth minerals and magnets to American companies.
Subsequently, Reuters reported that Chinese authorities had granted temporary export licences to rare earth suppliers serving America’s three largest automakers. However, industry executives and policymakers remain cautious, as many of the temporary arrangements are subject to political volatility.
Observers say the outcome of the London talks will be closely watched by investors and industry leaders alike, given the strategic importance of rare earth materials in powering clean energy transitions and military technologies.
