The renewed U.S.-China trade truce struck in London left a key space of export restrictions tied to nationwide safety untouched, an unresolved battle that threatens a extra complete deal, two individuals briefed on detailed outcomes of the talks instructed Reuters.
Beijing has not dedicated to granting export clearance for some specialised rare-earth magnets that U.S. navy suppliers want for fighter jets and missile programs, the individuals stated. The United States maintains export curbs on China’s purchases of superior synthetic intelligence chips out of concern that in addition they have navy purposes.
Editorial | Big deal: On the U.S.-China trade deal
At talks in London final week, China’s negotiators appeared to hyperlink progress in lifting export controls on military-use rare earth magnets with the longstanding U.S. curbs on exports of probably the most superior AI chips to China. That marked a brand new twist in trade talks that started with opioid trafficking, tariff charges and China’s trade surplus, however have since shifted to deal with export controls.
In addition, U.S. officers additionally signalled they need to prolong present tariffs on China for an extra 90 days past the August 10 deadline agreed in Geneva final month, each sources stated, suggesting a extra everlasting trade deal between the world’s two largest economies is unlikely earlier than then.
The two individuals who spoke to Reuters concerning the London talks requested to not be named as a result of each side have tightly managed disclosure. The White House, State Department and Department of Commerce didn’t instantly reply to requests for remark. China’s Foreign and Commerce ministries didn’t reply to faxed requests for remark.
President Donald Trump stated on Wednesday the handshake deal reached in London between American and Chinese negotiators was a “great deal,” including, “we have everything we need, and we’re going to do very well with it. And hopefully they are too.”
And U.S. Treasury Secretary Scott Bessent stated there can be no “quid pro quo” on easing curbs on exports of AI chips to China in trade for entry to rare earths.
China Chokehold
But China’s chokehold on the rare earth magnets wanted for weapons programs stays a possible flashpoint. China dominates international manufacturing of rare earths and holds a digital monopoly on refining and processing.
A deal reached in Geneva final month to cut back bilateral tariffs from crushing triple-digit ranges had faltered over Beijing’s restrictions on vital minerals exports that took form in April.
That prompted the Trump administration to reply with export controls stopping shipments of semiconductor design software program, jet engines for Chinese-made planes and different items to China.
At the London talks, China promised to fast-track approval of rare-earth export purposes from non-military U.S. producers out of the tens of hundreds at the moment pending, one of many sources stated. Those licenses could have a six-month time period. Beijing additionally supplied to arrange a “green channel” for expediting license approvals from trusted U.S. firms.
Initial alerts have been constructive, with Chinese rare-earths magnet producer JL MAG Rare-Earth, saying on Wednesday it had obtained export licences that included the United States, whereas China’s Commerce Ministry confirmed it had permitted some “compliant applications” for export licences.
But China has not budged on specialised rare earths, together with samarium, that are wanted for navy purposes and are exterior the fast-track agreed in London, the 2 individuals stated. Automakers and different producers largely want different rare earth magnets, together with dysprosium and terbium.
Big Issues Remain
The rushed trade assembly in London adopted a name final week between Trump and Chinese chief Xi Jinping. Trump stated U.S. tariffs can be set at 55% for China, whereas China had agreed to 10% from the United States.
Trump initially imposed tariffs on China as punishment for its large trade surplus to the United States and over what he says is Beijing’s failure to stem the stream of the highly effective opioid fentanyl into the U.S.
Chinese analysts are pessimistic concerning the chance of additional breakthroughs earlier than the August 10 deadline agreed in Geneva.
“Temporary mutual accommodation of some concerns is possible but the fundamental issue of the trade imbalance cannot be resolved within this timeframe, and possibly during Trump’s remaining term,” stated Liu Weidong, a U.S.-China knowledgeable on the Institute of American Studies, Chinese Academy of Social Sciences.
An extension of the August deadline might permit the Trump administration extra time to determine an alternate authorized declare for setting increased tariffs on China beneath the Section 301 authority of the USTR in case Trump loses the continuing authorized problem to the tariffs in U.S. courtroom, one of many individuals with information of the London talks stated.
The unresolved points underscore the issue the Trump administration faces in pushing its trade agenda with China due to Beijing’s management of rare earths and its willingness to make use of that as leverage with Washington, stated Ryan Hass, director of the John L. Thornton China Center on the Brookings Institution.
“It has taken the Trump team a few punches in the nose to recognise that they will no longer be able to secure another trade agreement with China that disproportionately addresses Trump’s priorities,” Hass stated.
Published – June 15, 2025 12:59 pm IST
