US-China trade talks to resume for a second day

By
Kate Holton
and
Alistair Smout
, Reuters
Photo:
AFP
Top US and Chinese officials will resume trade talks for a second day in London on Tuesday, hoping to secure a breakthrough over export controls for goods such as rare earths that have threatened a global supply chain shock and slower economic growth.
Investors are hoping that the two superpowers can improve ties after the relief sparked by a preliminary trade deal agreed in Geneva last month gave way to fresh doubts after Washington accused Beijing of blocking exports that are critical to sectors including autos, aerospace, semiconductors and defence.
The talks come at a crucial time for both economies, with customs data showing that China's exports to the US plunged 34.5 percent in May, the sharpest drop since February 2020, when the outbreak of the Covid-19 pandemic upended global trade.
While the impact on US inflation and the jobs market has so far been muted, the dollar remains under pressure from US policymaking.
The two sides met at the ornate Lancaster House in the British capital on Monday to discuss disagreements around the Geneva deal, and are due to resume talks early on Tuesday before both sides are expected to issue updates.
The US side is led by US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer, while the Chinese contingent is helmed by Vice Premier He Lifeng.
The inclusion of Lutnick, whose agency oversees export controls for the US, is one indication of how central rare earths have become. China holds a near-monopoly on rare earth magnets, a crucial component in electric vehicle motors.
Lutnick did not attend the Geneva talks at which the countries struck a 90-day deal to roll back some of the triple-digit tariffs they had placed on each other.
Trump's often erratic policymaking on tariffs has roiled global markets, sparked congestion and confusion in major ports, and cost companies tens of billions of dollars in lost sales and higher costs.
The second round of meetings between the two sides comes four days after Trump and Xi spoke by phone, their first direct interaction since Trump's 20 January inauguration.
Following the call Trump said Xi had agreed to resume shipments to the US of rare earths minerals and magnets, and Reuters reported that China has granted temporary export licenses to rare-earth suppliers of the top three US automakers.
But tensions remain high over the export controls, after factories around the world started to fret that they would not have enough of the materials they need to keep operating.
-
Reuters

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