US-China trade war talks have resumed in London as both sides attempt to ease long-standing economic tensions. The high-level meeting at Lancaster House brings together US Commerce Secretary Howard Lutnick and Chinese Vice Premier He Lifeng. Their goal is to resolve critical trade issues that could impact the global economy.
Key topics include China’s exports of rare earth elements and the US’s technology restrictions. These rare earths are essential for manufacturing smartphones, electric vehicles, and military equipment. The US accuses China of failing to deliver on promises made during a recent truce. China, meanwhile, claims the US has tightened tech restrictions and targeted Chinese firms unfairly.
This round of talks follows a phone call between President Trump and President Xi Jinping. Trump described the conversation as “very good,” saying it led to a positive conclusion for both sides. The timing of the call has raised hopes that a breakthrough could be near. Still, both countries remain cautious.
Howard Lutnick is joined by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer. Together, they are expected to push for the release of rare earth exports. China has approved some export licenses but not at the scale Washington expected. The US wants to see larger volumes and faster movement.
Economist Kevin Hassett said the talks may lead to a short meeting with a strong handshake. He believes a deal could follow quickly after that. According to Hassett, the US may ease export controls if China releases rare earths in sufficient volume. However, the US is expected to keep restrictions on advanced AI semiconductors.
Rare earths remain a major point of leverage for China. The country produces 69% of the global supply. That gives Beijing strong control over key parts of the supply chain. The US, in turn, controls high-end chip designs and software, which China needs to power its tech sector.
A previous agreement in May temporarily reduced tariffs. US duties on Chinese goods dropped to 30%, and China cut tariffs on US imports to 10%. China also agreed to lift barriers on rare earth exports. But both sides now claim the other has broken the deal.
Beijing says the US stopped sales of chip design tools and canceled visas for Chinese students. The US argues China failed to ease export limits on rare earth magnets. These back-and-forth accusations have made trust difficult.
Global markets are watching closely. The Organization for Economic Co-operation and Development (OECD) recently lowered its growth forecast to 2.9%. Rising trade barriers are a key reason. The OECD warned that weakened growth will affect almost every region of the world.
China’s latest trade data also adds pressure. Exports rose by only 4.8% in May, while imports fell by 3.4%. That shortfall was worse than analysts expected. It suggests the Chinese economy may be slowing.
China is also expanding its diplomacy elsewhere. Vice Premier He met UK Chancellor Rachel Reeves before the US talks began. He called for deeper cooperation between China and the UK. China’s planned new embassy in London has raised US concerns due to its location near key financial institutions.
The US-China trade war talks in London could shape global trade policy for years. Both sides have powerful bargaining tools. China wants relief from harsh US tech controls. The US wants a reliable supply of rare earths.
If talks go well, both countries may leave with gains. But if no agreement is reached, further economic instability could follow. With so much at stake, the world is watching the outcome of the US-China trade war talks closely.
