After two days of intense negotiations in London, the United States and China have agreed on a framework to restore trade flows, particularly for sensitive goods. This framework is now pending approval from US President Donald Trump and Chinese President Xi Jinping.
US Commerce Secretary Howard Lutnick announced that the talks yielded a plan to implement the Geneva consensus reached last month, which had temporarily eased tariffs between the two nations. He emphasized that initial tensions were addressed, allowing both sides to move forward with positive trade growth.
The Chinese delegation, led by chief trade negotiator Li Chenggang, described the discussions as professional and candid. Both parties will present the agreement to their respective leaders for final sign-off.
Key elements of the agreement include China’s commitment to accelerate shipments of rare earth metals, vital for US automotive and defense industries. In return, the US plans to relax some export controls, marking progress on two major sticking points in the trade relationship.
This easing of export restrictions is considered unprecedented, as Washington has previously justified such controls on national security grounds. The deal could pave the way for a more balanced trade environment, though concerns remain about China’s large trade surplus and alleged dumping practices.
Market reactions were cautious, with US equity futures slightly down and the Chinese yuan stable. However, the Chinese stock market showed some gains following the announcement. Analysts note that while the framework is a positive step, the ultimate success depends on the approval and enforcement by both presidents.
These talks followed a recent phone call between Trump and Xi, aimed at preventing further deterioration of trade relations after accusations from both sides of violating the Geneva accord.
The negotiations highlighted the growing importance of export controls in trade disputes, especially concerning rare earth elements and advanced technology products critical to military and industrial sectors.
US Trade Representative Jamieson Greer emphasized the importance of addressing other issues such as fentanyl flow and unfair trade practices in the coming months as part of a broader trade agreement. Both sides remain in frequent communication, although no further meetings are currently scheduled.
The agreement marks progress in a 90-day tariff truce initiated in Geneva. Despite the truce, trade disruptions continue, with China’s exports to the US falling sharply in May.
Experts warn that while frameworks have been agreed upon, the core conflict over chips and rare earths remains unresolved, underscoring the fragile nature of US-China trade relations.
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