The United States and China convened for a second day of discussions in London on Tuesday, with Washington signalling optimism that the two global powers might resolve their contentious trade dispute impacting the world economy.
US Commerce Secretary Howard Lutnick informed Bloomberg Television that the talks were “going well,” anticipating that Tuesday’s negotiations would extend “all day.”
Global stock markets remained subdued on Tuesday as investors awaited the outcome of the discussions, which aim to solidify a fragile truce in the trade conflict.
As talks continued, “the lack of positive headlines weighed on stocks and the dollar,” noted Kathleen Brooks, research director at XTB trading platform.
However, a top advisor to US President Donald Trump had stated on Monday that he expected “a big, strong handshake” following the talks at the UK’s historic Lancaster House.
Trump told reporters at the White House on Monday: “We are doing well with China. China’s not easy.”
He added, “I’m only getting good reports.”
The gathering of key officials from the world’s two largest economies commenced Monday in London, following an earlier round of negotiations in Geneva last month.
China’s exports of rare earth minerals, essential for a wide array of products including smartphones, electric vehicle batteries, and green technology, are expected to be a dominant topic on the agenda.
“In Geneva, we had agreed to lower tariffs on them, and they had agreed to release the magnets and rare earths that we need throughout the economy,” Trump’s chief economic advisor, Kevin Hassett, told CNBC on Monday.
While Beijing was releasing some supplies, Hassett added, “it was going a lot slower than some companies believed was optimal.”
Nevertheless, he expressed anticipation for “a big, strong handshake” at the conclusion of the talks.
“Our expectation is that after the handshake, any export controls from the US will be eased, and the rare earths will be released in volume,” Hassett further stated.
He also mentioned that the Trump administration might be willing to relax some recent restrictions on tech exports.
Potential Concessions?
Tensions between Washington and Beijing have escalated since Trump took office in January, with both nations engaging in a tariffs war by increasing duties on each other’s exports.
The Geneva pact, designed to temporarily de-escalate tensions, had reduced new US tariffs on Chinese goods from a staggering 145% to 30%, and Chinese countermeasures from 125% to 10%.
However, Trump recently declared that China had “totally violated” the deal.
Analysts, however, remained cautious.
“We doubt that the US will back off completely. That’s likely to restrain any relief rally,” commented Thomas Mathews, head analyst of Asia Pacific markets for Capital Economics.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, noted that while there had been “no breakthrough,” it appeared “the first day of the second round of negotiations reportedly went relatively well.”
“Rumours are circulating that the US may be willing to make concessions on tech exports in exchange for China easing restrictions on rare earth metal exports,” she said.
In April, on what he termed “Liberation Day,” Trump imposed sweeping levies of 10% on both allies and adversaries, and threatened steeper rates on dozens of economies.
These tariffs have already impacted trade, with official figures from Beijing showing that Chinese exports to the United States in May plummeted by 12.7%.
China is also engaged in discussions with other trading partners—including Japan and South Korea—to attempt to forge a united front against Trump’s tariffs.
Chinese leader Xi Jinping on Tuesday urged South Korea’s new President Lee Jae-myung to collaborate with Beijing to uphold free trade and ensure “the stability and smooth functioning of global and regional industrial and supply chains,” according to the Xinhua news agency.
Chinese Vice Premier He Lifeng is leading the team in London, which includes Commerce Minister Wang Wentao and China International Trade Representative Li Chenggang.
The US delegation is spearheaded by US Treasury Secretary Scott Bessent, Lutnick, and Trade Representative Jamieson Greer.
