Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
US commerce secretary Howard Lutnick said American and Chinese negotiators had agreed a framework deal to restore a truce in their trade war after marathon negotiations in London.
The breakthrough restores the trade war ceasefire reached in Geneva last month that had faltered because of differences over Chinese rare earth exports and US export controls.
The US team would return to Washington to present the deal to President Donald Trump, Lutnick said at the end of two days of talks in London. He did not provide any details about the framework.
Li Chenggang, one of the Chinese trade officials, said he hoped the negotiations, which he described as professional and candid, would create more trust between the two nations, according to Reuters. Li said the Chinese team would also present the agreement to President Xi Jinping.
In the deal that US and Chinese negotiators reached in Geneva last month both countries agreed to slash their respective tariffs on the other by 115 percentage points, and provided a 90-day window to resolve the US-China trade war. But the ceasefire came under pressure after Washington accused Beijing of reneging on an agreement to speed up the export of rare earths and China criticised new US export controls.
Lutnick and US trade representative Jamieson Greer joined Treasury secretary Scott Bessent for the talks in London with the Chinese delegation led by He Lifeng, a vice-premier responsible for the economy. Earlier on Tuesday, Lutnick said the talks could stretch into a third day.
Bessent left London before the talks ended to return to Washington ahead of a previously scheduled plan to testify before Congress on Wednesday.
The talks were held in central London in the government-owned mansion of Lancaster House, a short walk from Buckingham Palace. The historic venue, home also to the UK government’s 39,000-bottle wine cellar, was provided by the British government as neutral ground for the talks between the two economic superpowers.
The talks followed a call last week between Trump and Xi.
The London meeting marked the first face-to-face talks between He and Bessent since a 90-day truce was brokered in Geneva.
The high-stakes negotiations were launched to ensure two difficult issues — Chinese exports of rare earths to the US and American technology export controls on China — did not derail the broader talks.
Ahead of the first round of talks in Geneva, Bessent warned the high tariffs each side had imposed on the other amounted to an embargo on bilateral trade. Underscoring the risks, Chinese exports to the US fell more steeply in May, year on year, than at any point since the pandemic in 2020.
While the US has accused China of not honouring its pledge from Geneva to ease restrictions on rare earths exports, Beijing has increased pressure on Washington to eliminate technology-related export controls. It was also angry that the US announced new restrictions after the Geneva meeting.
The US has accused China of foot-dragging over approvals of shipments of rare earths, which are critical to the defence, car and tech industries. The slow pace of approvals has affected manufacturing supply chains in the US and Europe.
Beijing has in turn accused Washington of “seriously violating” the Geneva agreement by issuing new warnings on using Huawei chips globally, halting sales of chip design software to Chinese companies and cancelling visas for students from the country.
On Monday, a senior White House official indicated Trump could ease restrictions on selling chips to China if Beijing agreed to speed up the export of rare earths.
That would amount to a significant change of policy from Joe Biden’s administration, which implemented what it called a “small yard, high fence” approach designed to restrict Beijing’s ability to obtain US technology that could be used to help China’s military.
Credit: Source link
