What is happening now : location and participants
This week, US-China trade talks resumed in London (Lancaster House). These talks are considered to be very important. The US delegation is led by:
Commerce Secretary Howard Lutnick
Finance Secretary Scott Bessant
National Economic Council Director Kevin Hassett
US Trade Representative Jamison Greer
China is led by Vice Premier He Lifeng, which shows the seriousness of these US China trade talks.
The last talks took place in Geneva which resulted in a 90-day tariff truce the US reduced its tariffs from 145% to 30%, and China reduced its retaliatory tariffs from 125% to 10%.
Table of Contents
Why now? And why London?
Unfinished business in Geneva: The first meeting of the US China trade talks halted tariffs, but major problems remain. Now London is trying to find a permanent solution.
Big stakes: These tariffs have rattled markets, eroded consumer confidence, and disrupted supply chains.
Market conditions: Investors are cautiously optimistic stock markets are stable, and oil prices are rising slightly as progress is expected in the US China trade talks.
Key issues
a. Rare earth minerals
China is the world’s largest supplier of rare earths. In April, China restricted its export, causing concern among American companies.
In the US China trade talks, the US is demanding:
Rare earth exports should resume at the old level.
A “green channel” or faster process should be created for industries.
China may show some leniency in this, but it wants to maintain its strategic strength.
b. Semiconductor and technology restrictions
The US has imposed strict rules on the export of chips and other technical goods to slow down China AI and defense technology.
In the US China trade talks, the US may relax some restrictions, provided China increases rare earth exports.
c. Tariff and structural issues
Both countries want that heavy tariffs should not be re-imposed. But old issues like trade imbalance and intellectual property disputes are still not resolved.
What officials are saying
Howard Lutnick: “Talks are going well… we are spending a lot of time together.” This shows the importance of US-China trade talks.
Kevin Hassett: If China opens up rare earth exports, US could lift some export controls.
Donald Trump: Called China “not easy” but praised progress. Phone call with Xi Jinping softened the tone.
China’s position: China is confident as it has rare earth strength and is exporting more to Europe and Southeast Asia.
Impact on market and economy
a. Market
S&P 500 +0.2%, Dow +0.1%, Nasdaq +0.2%. Investors are optimistic about these us china trade talks.
The 10-year US Treasury bond yield is around 4.47%.
Oil prices rose slightly, gold is stable—this is a sign of cautious positivity.
b. Global growth
The World Bank has lowered the global growth forecast for 2025 to 2.3%, reason: uncertainty of us china trade talks and supply chain disruptions.
c. Inflation and policies
The US CPI report will come this week. If inflation rises, then the reduction in interest rates may be postponed. And what comes out in the us china trade talks can also affect inflation.
Prospects for a deal
In the near term:
A weak deal in which China resumes exports of rare earths and the US lifts some technology restrictions.
Tariffs will not be eliminated completely an average of 30-40% tariffs could remain.
Technology and intellectual property issues will not be resolved in this round of us-china trade talks.
Why long-term peace is unlikely:
In the words of one expert: “Fragile and temporary.”
China’s technological ambitions and US security concerns run deeper than these us-china trade talks.
What it means for you, and the general public
Short-term benefits:
US factories can get the raw materials they need.
If tariffs are limited, there will be relief from inflation during the holidays.
If peace remains in US China trade talks, markets will get support.
But caution is necessary:
If the agreement remains weak, it can break quickly.
Technology and geopolitical tensions will remain.
Big picture:
Companies are looking for supplies outside China like Vietnam, India, Mexico.
The US is now increasing domestic investment partnering with countries like Ukraine in the field of technology and rare earths.
Conclusion
These US China trade talks are a game of strategic pressure China is trying to outdo each other on rare earths, and the US on chip technology.
For now:
Markets are complacent, but not carefree.
Consumers may be in for a breather but the CPI report is crucial.
Policymakers are still formulating long-term strategy with a temporary agreement in mind.
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