US and China Extend Truce in Trade War After Intense London Talks
After two days of high-stakes negotiations in London, the United States and China have agreed to extend their truce in the ongoing trade war, settling—for now—escalating tensions between the two global economic giants. The breakthrough came in the form of a "framework" agreement focused on easing export restrictions on rare earths and semiconductors, which are critical to several industries.
While the broader tariff dispute—originally triggered by Donald Trump back in April—remains unresolved, this latest deal marks a strategic pause in the economic standoff. Talks wrapped up just before midnight UK time after more than 20 grueling hours of closed-door discussions.
The US team was led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer. On the Chinese side, negotiations were helmed by Vice-Premier He Lifeng, a seasoned player known for his sharp diplomacy and previous role in Geneva talks.
Lutnick struck an optimistic tone, suggesting that long-standing concerns over rare earth minerals—vital for everything from automobiles and electronics to defense systems—would soon be eased under the new deal.
The trade conflict, sparked when Trump slapped triple-digit tariffs on Chinese goods, has already left damage in its wake. Though those duties have since been scaled back to a 30% baseline, China's exports to the US nosedived 35% year-over-year in May, highlighting the real-world fallout of economic brinkmanship.
Tensions had been running high after both sides accused each other of backtracking on a preliminary deal made in Geneva last month. In response, China clamped down on rare earth exports, while the US continued to enforce limits on semiconductor shipments.
The global supply chain for rare earths, heavily dominated by China, has been choking, threatening to bring automotive production to a standstill this summer. Permanent magnets, crucial components in everything from windshield wipers to car doors, have been particularly impacted.
Lutnick said the newly agreed framework adds substance to the earlier Geneva consensus, which had hit a wall due to China's restrictions. The US, in return, will lift some of the export controls it recently introduced.
“We’ve got a framework that fulfills the Geneva call and the commitment made between the two presidents,” said Lutnick. “Now, we take it back to President Trump for final sign-off, and the Chinese side will do the same with President Xi. Once they both approve, we move forward.”
China’s Vice Commerce Minister, Li Chenggang, confirmed that a mutual framework had been developed and was now pending approval at the highest levels.
Reactions from the financial world were cautiously optimistic. “At least now, there’s a clear line neither party seems willing to cross,” said Mark Dong, co-founder of Minority Asset Management in Hong Kong.
However, not everyone was convinced. A Deutsche Bank note to clients reminded investors of the false dawns during the 2018–2019 US-China trade talks, where seemingly positive meetings often fell apart once officials returned home.
Still, Lutnick emphasized that the export restrictions on rare earth minerals and magnets were being treated as a core issue in the deal. “The US imposed countermeasures when the flow of rare earths stopped,” he said. “You can expect those to be rolled back—just as President Trump has indicated—in a balanced and reciprocal way.”
On China's end, Li Chenggang described the discussions as “professional, rational, in-depth, and candid,” underscoring the seriousness both nations are applying to de-escalating the conflict.
Description:
"The US and China have extended their trade war truce with a new framework deal focused on rare earths and semiconductors after over 20 hours of intense talks in London. Tariff disputes remain unresolved, but tensions ease—for now."