Lutnick: China tariff pause likely won't be extended

Lutnick: China tariff pause likely won't be extended

US and China trade negotiations are ongoing in London, with the focus on addressing critical issues such as rare earth elements and export curbs. The talks, which resumed on Tuesday, aim to strengthen the temporary 90-day trade agreement and ease tensions that have escalated beyond tariffs.

The US delegation, led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer, met with their Chinese counterparts, including Vice Premier He Lifeng, Commerce Minister Wang Wentao, and International Trade Representative Li Chenggang. The talks are expected to continue for a second day, with key discussions centered around rare earth elements and export controls [2].

US officials have expressed concerns over China's April decision to impose licensing requirements on exports of rare earth elements, which are vital to industries such as automakers and the tech sector. The US delegation is seeking guarantees that Beijing will ease its export limits on these critical minerals [3].

While the US is open to loosening restrictions on some microchips, high-end Nvidia chips capable of powering AI systems will remain subject to export controls. The US wants a "handshake" from China on rare earths, but the outcome remains uncertain [3].

The London talks come at a sensitive moment for both economies, with signs of strain evident in trade data and economic indicators. Chinese exports to the US plunged 34.5% year-on-year in May, while household and business confidence have declined in the US [3].

The rare earths standoff has triggered industrial disruptions, with China temporarily granting export licenses to suppliers serving top US automakers following the Trump-Xi call. The broader trade framework also faces legal uncertainty, with the Trump administration appealing a US trade court ruling on its tariffs on Chinese goods [3].

In an interview with CNBC, White House economic advisor Kevin Hassett emphasized that the purpose of the talks is to ensure China's seriousness and to secure handshakes on critical issues. However, he did not provide specific details on the expected outcomes [3].

The London talks are expected to provide insights into the strength of China's position and the potential for further de-escalation in the trade war. Despite the challenges, both sides are committed to finding a resolution that benefits their respective economies.

References:
[1] https://www.businessinsider.com/us-and-china-reach-trade-framework-after-talks-in-london-2025-6
[2] https://www.outlookbusiness.com/economy-and-policy/trade-war-ceasefire-us-china-talks-enter-day-2-with-rare-earth-elements-in-focus
[3] https://www.business-standard.com/world-news/us-china-trade-talks-london-export-curbs-rare-earth-chip-supply-trump-125061000154_1.html
[4] https://www.foxbusiness.com/fox-news-world/us-china-meet-london-round-2-high-level-trade-talks