High-level trade discussions between the United States and China are set to resume in London, with a primary focus on the critical issue of rare earth minerals and advanced technology. This new round of talks follows a recent phone conversation between US President Donald Trump and Chinese President Xi Jinping, signaling an effort to de-escalate ongoing trade disputes. Both nations have previously accused each other of deviating from an agreement reached in Geneva in May, which aimed to roll back tariffs that had soared above 100 percent.
Delegations and Expectations
The American delegation to London will be spearheaded by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer. They are scheduled to meet with China’s Vice Premier He Lifeng and his team. The inclusion of Secretary Lutnick is seen by some as an indication of the US’s willingness to consider easing certain controls that Beijing perceives as impediments to its long-term economic expansion.
Following his discussion with President Xi, President Trump conveyed optimism regarding the London meeting, anticipating positive outcomes. Washington’s stance, as articulated by Kevin Hassett, director of the White House National Economic Council, is a clear expectation for rare-earth materials and magnets to flow freely, mirroring pre-April conditions, without the imposition of new technical barriers.
The current US tariff reprieve on Chinese goods is slated to end in August. There is a possibility that President Trump might choose to reinstate the original April rates or even implement higher duties, exceeding the current 10% baseline.
China’s Economic Landscape and Strategic Approach
Despite its recent actions to control rare-earth exports, China grapples with its own domestic economic challenges. Persistent deflation and an uptick in unemployment are notable concerns in Beijing, providing President Xi with a strong incentive to secure a durable trade resolution. China’s Foreign Ministry reiterated that President Trump had assured President Xi of a welcoming environment for Chinese students in the United States, a sentiment President Trump later affirmed.
The official Xinhua News Agency recently published commentary criticizing the US for framing economic relations predominantly through a security lens. The article warned that such an approach could become “the biggest obstacle to win-win cooperation.” Nevertheless, it acknowledged common interests and broad potential for collaboration, emphasizing that the core of economic and trade relations between the two countries is mutual benefit.
Rare Earth Shipments: A Key Indicator
China’s outbound shipments of rare earths experienced a significant increase in May, rising 23% from April to reach 5,864.60 tons. This marks the highest monthly total in a year, occurring even as Beijing’s export limitations on certain minerals had previously disrupted international sales and created supply shortages across global manufacturing sectors.
The initial tightening of exports in April on several rare earth elements and magnets by China had a notable impact, causing production halts in some segments of the world’s automotive industry. These measures also played a crucial role in the rare phone conversation between President Trump and President Xi. While overall rare earth exports from the world’s leading supplier climbed in May, the full impact of the April controls remains to be seen, as they do not encompass all types of rare earth products exported by China. More detailed data, expected on June 20, will provide further clarity. Earlier customs figures indicated a sharp 50% drop in magnet exports in April, leading to temporary closures in some European auto-parts factories and warnings from semiconductor firms about potential supply depletion within weeks.
For the first five months of 2025, China’s total exports of the 17 rare earth minerals saw a slight increase to 24,827 tons, compared to 24,266.5 tons during the same period in the previous year.
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