A new round of high-stakes US-China trade talks began this week in central London, as both nations seek to calm growing tensions over tariffs and technology controls.
Commerce Secretary Howard Lutnick is leading the US team, joined by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer. They met with Chinese Vice Premier He Lifeng at Lancaster House to address trade issues between the world’s two largest economies.
Key topics include China’s control of rare earth metals—vital for making smartphones, electric cars, and military tech—and Beijing’s reduced access to US-made semiconductors and AI-related tools.
The meeting follows a recent phone call between President Donald Trump and Chinese President Xi Jinping, which Trump described as “very good.” It was their first direct conversation since the trade war began in February.
Washington and Beijing had reached a temporary tariff truce last month, but both sides have since accused each other of breaking parts of the agreement. That truce had lowered US tariffs on Chinese goods from 145% to 30% and cut Chinese tariffs on US imports to 10%. The deal also gave both sides 90 days to strike a broader agreement.
However, trade officials say progress has stalled. The US claims China is still limiting the export of rare earth magnets. Meanwhile, Beijing says the US has restricted chip sales, blacklisted Chinese tech firms, and even canceled student visas.
China mines about 69% of the world’s rare earths, making them essential in any future trade deal. Swetha Ramachandran, a fund manager at Artemis, noted this dominance gives China leverage. “There are enough chips on the table for both sides to walk away with wins,” she said.
Beijing announced Saturday that it had approved some rare earth export licenses, but did not say which countries would receive shipments. Trump responded Friday saying Xi had agreed to restart rare earth trade, though White House Economic Director Kevin Hassett said on Sunday that shipments were still slower than expected.
Tensions also surround a new Chinese embassy planned near London’s financial district at Royal Mint Court. While Beijing secured the site in 2018, the US has raised concerns about its proximity to sensitive financial infrastructure.
Before the talks with the US, He Lifeng met with UK Chancellor Rachel Reeves and stressed the need for ongoing cooperation between China and Britain on finance and trade.
Meanwhile, Britain is working against a July 9 deadline to finalize a separate tariff agreement with the US. If talks fail, UK steel exports could face higher duties at US ports.
The broader impact of the trade war is already being felt. The Organization for Economic Co-operation and Development (OECD) recently cut its global growth forecast from 3.1% to 2.9%, citing a sharp rise in trade barriers.
“Economic weakness will spread around the world with few exceptions,” the OECD warned in its latest outlook.
Fresh trade figures from China released Monday show mixed results. Exports rose 4.8% in May year-on-year, but imports fell 3.4%—a larger drop than expected, signaling ongoing economic pressure from reduced global demand.
While both sides expressed hope for progress, trade experts caution that major issues remain unresolved. Still, observers say the current talks are a positive step toward preventing another round of tariff hikes and restoring confidence in global trade.
As the 90-day truce window begins to close, the coming weeks could prove critical in shaping the future of US-China economic relations and their wider impact on the global economy.
