United States, China holding trade talks in London

High-level delegations from the United States and China are meeting in London on Monday to try and shore up a fragile truce in a trade dispute that has roiled the global economy.

A Chinese delegation led by Vice Premier He Lifeng was due to hold talks with U.S. Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer at a U.K. government building.

The talks, which are expected to last at least a day, follow negotiations in Geneva last month that brought a temporary respite in the trade war.

The two countries announced May 12 they had agreed to a 90-day suspension of most of the 100%-plus tariffs they had imposed on each other in an escalating trade war that had sparked fears of recession.

The U.S. and China are the world’s biggest and second-biggest economies. Chinese trade data shows that exports to the United States fell 35% in May from a year earlier.

Since the Geneva talks, the U.S. and China have exchanged angry words over advanced semiconductors that power artificial intelligence, “ rare earths ” that are vital to carmakers and other industries, and visas for Chinese students at American universities.

President Donald Trump spoke at length with Chinese leader Xi Jinping by phone last Thursday in an attempt to put relations back on track. Trump announced on social media the following day that the trade talks would resume in London.

The U.K. government says it is providing the venue and logistics but is not involved in the talks, though British Treasury chief Rachel Reeves met with both Bessent and He on Sunday.

“We are a nation that champions free trade and have always been clear that a trade war is in nobody’s interests, so we welcome these talks,” the British government said in a statement.

Technology is a major sticking point

The latest frictions began just a day after the May 12 announcement of the Geneva agreement to “pause” tariffs for 90 days.

The U.S. Commerce Department issued guidance saying the use of Ascend AI chips from Huawei, a leading Chinese tech company, could violate U.S. export controls. That’s because the chips were likely developed with American technology despite restrictions on its export to China, the guidance said.

The Chinese government wasn’t pleased. One of its biggest beefs in recent years has been over U.S. moves to limit the access of Chinese companies to technology, and in particular to equipment and processes needed to produce the most advanced semiconductors.

“The Chinese side urges the U.S. side to immediately correct its erroneous practices,” a Commerce Ministry spokesperson said.

U.S. Commerce Secretary Howard Lutnick wasn’t in Geneva but will join the talks in London. Analysts say that suggests at least a willingness on the U.S. side to hear out China’s concerns on export controls.

China shows signs of easing up on rare earths

One area where China holds the upper hand is in the mining and processing of rare earths. They are crucial for not only autos but also a range of other products from robots to military equipment.

The Chinese government started requiring producers to obtain a license to export seven rare earth elements in April. Resulting shortages sent automakers worldwide into a tizzy. As stockpiles ran down, some worried they would have to halt production.

Trump, without mentioning rare earths specifically, took to social media to attack China.

“The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US,” Trump posted on May 30.

The Chinese government indicated Saturday that it is addressing the concerns, which have come from European companies as well. A Commerce Ministry statement said it had granted some approvals and “will continue to strengthen the approval of applications that comply with regulations.”

The scramble to resolve the rare earth issue shows that China has a strong card to play if it wants to strike back against tariffs or other measures.

Plan to revoke student visas adds to tensions

Student visas don’t normally figure in trade talks, but a U.S. announcement that it would begin revoking the visas of some Chinese students has emerged as another thorn in the relationship.

China’s Commerce Ministry raised the issue when asked last week about the accusation that it had violated the consensus reached in Geneva.

It replied that the U.S. had undermined the agreement by issuing export control guidelines for AI chips, stopping the sale of chip design software to China and saying it would revoke Chinese student visas.

“The United States has unilaterally provoked new economic and trade frictions,” the ministry said in a statement posted on its website.

U.S. Secretary of State Marco Rubio said in a May 28 statement that the United States would “aggressively revoke visas for Chinese students, including those with connections to the Chinese Communist Party or studying in critical fields.”

More than 270,000 Chinese students studied in the U.S. in the 2023-24 academic year.