U.S.-China trade, export control talks push through second full day in London

Japan Today

3 days ago

Chinese Vice Premier He Lifeng leaves Lancaster House, on the second day scheduled for trade talks between the U.S. and China, in London, Britain, June 10, 2025. REUTERS/Toby Melville
By Kate Holton, Alistair Smout and Andrea Shalal
Trade talks between the U.S. and China in London are going well and could spill into a third day, U.S. negotiators said, as the two superpowers pushed for a breakthrough on dueling export controls that had threatened to unravel a delicate tariff truce.
U.S. Commerce Secretary Howard Lutnick said he hoped the talks would end on Tuesday evening, but said they may run into Wednesday.
"I think the talks are going really, really well. We're very much spending time and effort and energy - everybody's got their head down working closely," he told reporters at Lancaster House, where the two teams have met for two days.
"I hope they end this evening, but if they need be, we'll be here tomorrow," he said as the U.S. delegation arrived for evening talks with Chinese officials.
Negotiators paused for a break earlier before reconvening at about 8 p.m. No details were immediately available from the meetings, which stretched for more than five hours following a full day on Monday.
A White House official also said the U.S.-China trade talks were going "fine," but declined to provide details.
Having agreed to step back from a full-blown trade embargo at a first round of talks in Geneva in May, the two sides are now seeking agreement after they accused each other of trying to throttle supply chains with a raft of export controls.
White House economic adviser Kevin Hassett said on Monday that the U.S. could lift recently imposed export controls on goods such as semiconductors if China sped up the delivery of rare earths and magnets that are crucial to its economy.
The blow-up over rare earths, which has sparked alarm in boardrooms and factory floors around the world, came after last month's preliminary deal in Geneva to cut tariffs, which eased investor fears that a trade war would lead to a global slowdown.
William Reinsch, a trade expert with the Center for Strategic and International Studies, said the meeting's length may indicate difficulty in the negotiations.
"My read is Trump is very anxious his team comes back with something he can brag about, and it looks like the Chinese are holding out, said Reinsch, a former U.S. official. "That said, I expect there to be some kind of agreement eventually, and you can be sure he'll call it a big success, regardless of what's in it."
Josh Lipsky, chair of international economics at the Atlantic Council, said the extended nature of the talks this week could point to more detailed discussions. "My sense of that is that they're getting granular at this point, which should be seen as a positive," he said, although he cautioned against expecting a major breakthrough this week.
TARIFF TURMOIL
U.S. President Donald Trump's shifting tariff policies have 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 World Bank on Tuesday slashed its global growth forecast for 2025 by four-tenths of a percentage point to 2.3%, saying higher tariffs and heightened uncertainty posed a "significant headwind" for nearly all economies.
But markets have made up much of the losses they endured after Trump unveiled his sweeping "Liberation Day" tariffs in April, aided by the reset in Geneva between the world's two biggest economies.
The second round of U.S.-China talks, which followed a rare phone call between Trump and Chinese President Xi Jinping last week, comes at a crucial time for both economies.
Customs data published on Monday showed that China's exports to the U.S. plunged 34.5% in May, the sharpest drop since the outbreak of the COVID pandemic.
While the impact on U.S. inflation and its jobs market has so far been muted, tariffs have hammered U.S. business and household confidence and the dollar remains under pressure.
The talks have been led by U.S. Treasury Secretary Scott Bessent, Lutnick and U.S. Trade Representative Jamieson Greer, with the Chinese contingent helmed by Vice Premier He Lifeng.
The two sides met for almost seven hours on Monday and resumed just before 10 a.m. on Tuesday, with both expected to issue updates later in the day.
The inclusion of Lutnick, whose agency oversees export controls for the U.S., indicates just how central rare earths have become. He did not attend the Geneva talks, when the countries struck a 90-day deal to roll back some of the triple-digit tariffs they had placed on each other.
China holds a near-monopoly on rare earth magnets, a crucial component in electric vehicle motors, and its decision in April to suspend exports of a wide range of critical minerals and magnets upended global supply chains.
In May, the U.S. responded by halting shipments of semiconductor design software and chemicals and aviation equipment, revoking export licences that had been previously issued.
Hassett said he expected any export controls from the U.S. to be eased and rare earths released in volume once the two sides had shaken hands in London.
But he said any easing would not include the "very, very high-end Nvidia stuff," referring to Nvidia's most advanced artificial-intelligence chips that have been blocked from going to China over concerns about potential military applications.
"I'm talking about possible export controls on other semiconductors which are also very important to them," he said.
© Thomson Reuters 2025.