Win-win results: A trucker moves out of a container yard at the port of Oakland in California. As trade talks between the United States and China resume, there is growing optimism on both sides that agreements can be reached. — Reuters
LONDON: The United States and China are set to resume trade negotiations in London in a bid to further defuse tensions over rare earth minerals and advanced technology following a phone call between leaders Donald Trump and Xi Jin Ping last week.
Both sides have accused the other of reneging on a deal in Geneva in May, when they reached an agreement to at least temporarily lower tariffs that had climbed to more than 100%.
After reaching an understanding with Xi on resuming flows of critical minerals, Trump said he expected the London meeting to go “very well”.
China said on Saturday it approved some applications for rare earth exports, without specifying which countries or industries were involved.
“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,” Kevin Hassett, the head of the National Economic Council at the White House, said on Sunday on CBS’s Face the Nation.
US-China trade tensions escalated this year as Trump hiked duties on Chinese goods, prompting retaliation from Beijing.
While the Geneva deal was meant to pave the way for a broader de-escalation, subsequent talks quickly stalled amid mutual recriminations.
The United States complained about a decline in shipments of rare earth magnets essential for American electric vehicles and defence systems.
China bristled at US restrictions on artificial intelligence chips from Huawei Technologies Co, software for designing chips, plane engines and visas for upwards of 280,000 Chinese students.
In London, US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer were to meet a Chinese delegation led by Vice-Premier He Lifeng.
The addition of Lutnick, who’s in charge of curbs on the sale of advanced technology, signals Trump may be willing to consider reversing some of the restrictions that threaten to hobble China’s long-term growth ambitions.
While the call between Trump and Xi last week generated some hope on Wall Street for lower duties between the trading partners, investor optimism was limited.
While promising to reshape US trading relationships, Trump so far has reached only one new trade agreement – with the United Kingdom.
Trump’s reprieve on US tariffs for Chinese goods runs out in August, unless he decides to extend it.
If deals aren’t reached, the White House has said Trump plans to restore tariff rates to the levels he first announced in April, or lower numbers that exceed the current 10% baseline.
The confusion after the Geneva meeting underscored the challenge of deal-making between China and the United States.
“They left too many things open to interpretation and they all paid the price for it in the intervening weeks,” said Josh Lipsky, chair of international economics at the Atlantic Council.
The United States and China just “want to get back to where they were in Switzerland with a few more agreements put down on paper to actually understand what is gonna be licensed”.
For now, Xi appears to be betting that a reset in ties will lead to tangible wins in the weeks and months ahead, including tariff reductions, an easing of export controls and a less-fraught tone.
After the Trump call, Xi said he expected the United States to “remove the negative measures taken against China”.
While Xi flexed his muscles with the rare earths restrictions, China’s economic woes, seen by persistent deflation and concerns about unemployment, give him reasons to come to strike a lasting deal. — Bloomberg
