ISLAMABAD (PEN) : Senior officials from the United States and China met for a second day of trade negotiations on Tuesday at Lancaster House in London, focusing primarily on easing tensions over export controls of rare earth materials. These critical resources are vital for numerous high-tech industries and have become a flashpoint in the ongoing trade dispute between the two economic powers.
Talks Follow Preliminary Geneva Agreement
The discussions build on a preliminary agreement reached last month in Geneva, where both sides agreed to a 90-day truce involving tariff rollbacks and a temporary easing of trade barriers. However, disagreements remain, especially around China’s recent restrictions on rare earth exports, which have raised concerns globally about supply chain disruptions.
Chinese customs data revealed a sharp 34.5% decline in exports to the US in May—the steepest drop since the early days of the COVID-19 pandemic in 2020. Although immediate impacts on US inflation and employment appear limited, market analysts warn that ongoing uncertainty is putting downward pressure on the dollar.
High-Level Delegations Lead Negotiations
The US delegation is headed by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer. China’s team is led by Vice Premier He Lifeng, a key figure in Beijing’s economic policy. The participation of Commerce Secretary Lutnick, who oversees export controls, highlights the critical importance of rare earth minerals in the talks.
China controls nearly the entire global supply of rare earth magnets—essential components in electric vehicle motors, aerospace technology, and defense equipment. While Lutnick was not present during the Geneva talks, his involvement in London signals an intensified US focus on securing stable access to these materials.
Export Controls and Global Supply Chain Concerns
Recent reports of shortages in rare earth minerals have stoked fears of slowdowns in industries ranging from automotive manufacturing to semiconductor production. The US has accused China of imposing informal barriers on exports, undermining the Geneva agreement’s intent.
Last week, Presidents Donald Trump and Xi Jinping held their first direct conversation since Trump took office, during which Xi reportedly agreed to resume exports of rare earth minerals and magnets to American firms. Following this, Reuters reported that Chinese authorities had issued temporary export licenses to suppliers serving the US’s three largest automakers. Yet, industry insiders caution that these temporary measures remain vulnerable to political shifts.
Global Stakes and Industry Attention
The outcome of the London negotiations is being closely monitored by investors and industry leaders worldwide, given rare earth materials’ strategic role in powering clean energy technologies and military applications.
As these talks continue, both sides face pressure to reach a resolution that balances national security concerns with the need to maintain vital global supply chains.
