US and China ‘back to square one' after two days of trade talks

Telegraph

a day ago

Talks between the US and China are 'back to square one' after two days of trade negotiations in London failed to secure a major deal.
US commerce secretary Howard Lutnick said the two sides had agreed on a 'framework' to put their trading relations back on track and repair the truce initially agreed in Geneva last month.
There was little market reaction to the announcement at Lancaster House shortly after midnight, with the dollar strengthening a little and stock markets opening marginally higher.
The two sides have until August 10 to negotiate a more comprehensive agreement to ease trade tensions, or US tariffs on China will snap back from about 30pc to 145pc, with China's levies on America increasing from 10pc to 125pc.
Josh Lipsky, of the Atlantic Council's GeoEconomics Center in Washington, said: 'They are back to square one but that's much better than square zero.'
Deutsche Bank analyst Jim Reid added: 'While the mood music has stayed positive, investors may be wary of the pattern that emerged during the previous US-China trade talks in 2018-19, when apparently constructive in-person meetings seemed to take a step back as the negotiating teams returned to their capitals.
'So there's perhaps a little disappointment this morning that we haven't yet got a bigger announcement, even though there's time to hear the full conclusions of the meeting.'
Top officials from Washington and Beijing had gathered in London after accusations from both sides that they had violated the terms of the deal made in Switzerland.
Donald Trump and Xi Jinping held a call last week which Mr Lutnick said 'gave the fundamental foundation on which we were able to reach agreement'.
Mr Lutnick said: 'We have reached a framework to implement the Geneva consensus and the call between the two presidents.
'The idea is we're going to go back and speak to President Trump and make sure he approves it.
'They're going to go back and speak to President Xi and make sure he approves it, and if that is approved, we will then implement the framework.'
In a separate briefing, China's vice commerce minister Li Chenggang also said a trade framework had been reached in principle that would be taken back to US and Chinese leaders.
Mr Lutnick said China's restrictions on exports of rare earth minerals and magnets to the US would be resolved as a 'fundamental' part of the framework agreement.
He also said the agreement would remove some of the recent US export restrictions, but did not provide details.
Kathleen Brooks, research director at XTB, said: 'Overall, the US-China trade agreement is taking its time, and it could test the market's patience.'
Meanwhile, the European Union reportedly believes it could extend its trade negotiations with the US beyond the initial deadline next month.
The EU thinks there could be scope for further talks if it agrees a deal in principle by July 9, which is considered its best-case scenario, according to Bloomberg.
The Trump administration is scheduled to enforce 50pc tariffs on EU goods beyond that date unless a deal is reached.