US Commerce Secretary Howard Lutnick said yesterday trade talks with China were going well as the two sides met for a second day in London, seeking a breakthrough on export controls that have threatened a fresh rupture between the superpowers.
Having agreed to step back from a full-blown trade embargo at a first round of talks in Geneva in May, the two sides are now seeking agreement after they accused each other of trying to throttle supply chains with a raft of export controls.
White House economic adviser Kevin Hassett said on Monday that the US could lift recently imposed export controls on goods such as semiconductors if China sped up the delivery of rare earths and magnets that are crucial to its economy.
The blow-up over rare earths, which has sparked alarm in boardrooms and factory floors around the world, came after last month’s preliminary deal in Geneva to cut tariffs, which eased investor fears that a trade war would lead to a global slowdown.
“(Talks went on) all day yesterday, and I expect (them) all day today,” Lutnick told reporters. “They’re going well, and we’re spending lots of time together.”
Trump’s shifting tariff policies have roiled global markets, sparked congestion and confusion in major ports, and cost companies tens of billions of dollars in lost sales and higher costs.
But markets have made up much of the losses they endured after Trump unveiled his sweeping “Liberation Day” tariffs in April, aided by the reset in Geneva between the world’s two biggest economies.
The second round of US-China talks, which followed a rare phone call between Trump and Chinese President Xi Jinping last week, comes at a crucial time for both economies.
Customs data published on Monday showed that China’s exports to the US plunged 34.5 per cent in May, the sharpest drop since the outbreak of the Covid pandemic.
While the impact on US inflation and its jobs market has so far been muted, tariffs have hammered US business and household confidence and the dollar remains under pressure.
The talks have been led by US Treasury Secretary Scott Bessent, Lutnick and US Trade Representative Jamieson Greer, with the Chinese contingent helmed by Vice Premier He Lifeng.
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