U.S., China to resume trade talks as focus shifts to critical minerals

In this file photo taken on June 28, 2019, China's President Xi Jinping (R) shakes hands with U.S. President Donald Trump before a bilateral meeting on the sidelines of the G20 Summit in Osaka. Photo by BRENDAN SMIALOWSKI/AFP via Getty Images

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The U.S. and China are set to resume trade negotiations in London on Monday in a bid to further defuse tensions over rare-earth minerals and advanced technology following a phone call between leaders Donald Trump and Xi Jinping last week.

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Both sides have accused the other of reneging on a deal in Geneva in May, when they reached an agreement to at least temporarily lower tariffs that had climbed to more than 100 per cent. After reaching an understanding with Xi on resuming flows of critical minerals, Trump said he expected the London meeting to go “very well.”

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China said Saturday it approved some applications for rare-earth exports, without specifying which countries or industries were involved.

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“We want the rare earths, the magnets that are crucial for cell phones and everything else to flow just as they did before the beginning of April, and we don’t want any technical details slowing that down,” Kevin Hassett, head of the National Economic Council at the White House, said Sunday on CBS’s Face the Nation. “And that’s clear to them.”

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U.S.-China trade tensions escalated this year as Trump hiked duties on Chinese goods, prompting retaliation from Beijing. While the Geneva deal was meant to pave the way for a broader de-escalation, subsequent talks quickly stalled amid mutual recriminations.

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The U.S. complained about a decline in shipments of rare-earth magnets essential for American electric vehicles and defence systems. China bristled at US restrictions on artificial intelligence chips from Huawei Technologies Co., software for designing chips, plane engines and visas for upwards of 280,000 Chinese students.

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In London, U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer will meet a Chinese delegation led by Vice Premier He Lifeng. The addition of Lutnick, who’s in charge of curbs on the sale of advanced technology, signals Trump may be willing to consider reversing some of the restrictions that threaten to hobble China’s long-term growth ambitions.

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While the call between Trump and Xi last week generated some hope on Wall Street for lower duties between the trading partners, investor optimism was limited. While promising to reshape U.S. trading relationships, Trump so far has reached only one new trade agreement — with the U.K.

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Trump’s reprieve on U.S. tariffs for Chinese goods runs out in August, unless he decides to extend it. If deals aren’t reached, the White House has said Trump plans to restore tariff rates to the levels he first announced in April, or lower numbers that exceed the current 10 per cent baseline.

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The confusion after the Geneva meeting underscored the challenge of deal-making between China and the U.S.