US And China To Resume Trade Talks In London Amid Rare Earth Export Disputes

(MENAFN- Live Mint) Top officials from the US and China will continue trade negotiations in London on Tuesday, aiming to resolve disputes over export controls on key goods like rare earth-materials vital to global industries.

Here are the top seven updates:

1. Hopes for improved relations were reignited by a preliminary deal in Geneva last month but have since dimmed after the US accused China of restricting exports crucial to sectors such as automotive, aerospace, semiconductors, and defence, Reuters reported.

Also Read: China's rare earth exports jump ahead of US trade negotiations

2. Moreover, investors are closely watching for signs of progress to avoid potential disruptions in the global supply chain and economic slowdown. The talks come at a crucial time for both economies, with customs data showing that China's exports to the US plunged 34.5% in May, the sharpest drop since February 2020, when the outbreak of the COVID-19 pandemic upended global trade.

3. Though the effects on US inflation and employment have been limited so far, the dollar continues to face pressure due to domestic policy concerns. US and Chinese officials convened at London's historic Lancaster House on Monday to address ongoing disagreements related to the Geneva trade agreement, Reuters reported.

Also Read: Trump says Xi agreed to restart the flow of rare earth minerals. Why are rare earths important for Chinese economy?

4. The discussions are set to continue early Tuesday, with updates anticipated from both delegations afterwards. The US side is led by US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer, while the Chinese contingent is helmed by Vice Premier He Lifeng, Reuters reported.

Also Read: China's rare earth exports jump ahead of US trade negotiations

5. The inclusion of Lutnick, whose agency oversees export controls for the U.S., is one indication of how central rare earths have become. China holds a near-monopoly on rare earth magnets, a crucial component in electric vehicle motors. Lutnick did not attend the Geneva talks at which the countries struck a 90-day deal to roll back some of the triple-digit tariffs they had placed on each other.

6. Trump's often erratic policymaking on tariffs has 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 second round of meetings between the two sides comes four days after Trump and Xi spoke by phone, their first direct interaction since Trump's January 20 inauguration.

Also Read: US, China holding trade talks in London after Trump-Xi phone call

Though the effects on US inflation and employment have been limited so far, the dollar continues to face pressure due to domestic policy concerns.

7. After a call with Trump, Chinese President Jinping agreed to restart rare earth mineral and magnet shipments to the US, with China granting temporary export licenses to suppliers serving the top three American automakers. However, despite this development, tensions remain elevated as factories worldwide continue to worry about potential shortages of critical materials needed to maintain operations.

(With inputs from Reuters)

Key Takeaways

• The resumption of talks highlights the importance of rare earth materials in global industries.
• China's near-monopoly on rare earths could pose significant risks to US economic interests.
• Ongoing trade disputes may impact global supply chains, causing potential shortages in key sectors.

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