US, China Strike Rare Earth Trade Framework Pending Trump-Xi Approval, Paving Path for Broader Tariff Resolution

The United States and China have concluded two days of high -level commercial negotiations in London with what the two parties describe as a revolutionary framework to restore the flow of rare land metals and facilitate certain export controls – an agreement is now awaiting the approval of President Donald Trump and Chinese President Xi Jinping.

The talks, held in camera at Lancaster House near the Buckingham Palace, include US Secretary for Trade Howard Lutnick and the Representative of the United States Jamieson Greer, while China sent the Vice-Minister of Lifeg and the chief negotiator Li Chenggang. More than 20 hours of negotiations led to an end of evening agreement on Tuesday, those responsible for mood as “intense but productive”.

Lutnick confirmed that the two delegations had agreed with a way to follow to implement the Geneva consensus reached last month, which aimed to evolve the prices imposed during the prolonged trade war.

“First, we had to release negativity,” Larick told journalists. “Now we can go ahead to try to do a positive trade, growth in trade.”

Rare earths at the heart of greater change

The centerpiece of the agreement is China’s commitment to accelerating rare land metal expeditions – essential elements for electric vehicles, missile guide systems, smartphones and other advanced technologies. In return, Washington will start to relax certain export controls, in particular those related to industrial software and components necessary for Chinese manufacturers.

This mutual compromise on rare earths and strategic goods is interpreted by initiates as a potential inflection point. It is believed that by resolving the long -standing dead end on rare earth exports, the two parties may be able to take momentum to combat wider tariff disputes and other areas contested in the trade.

Analysts note that rare earths have become one of the most powerful negotiation tokens of the American-Chinese commercial impasse. China controls more than 70% of global supply, and disruptions in recent months have triggered an alarm in major economies, especially in Europe and Asia, where car manufacturers and defense entrepreneurs have warned of production slowdowns.

While the negotiators have expressed their careful optimism, the agreement is still provisional. “We have a framework, but we always need our directors to sign,” said Li Chenggang in China when he was addressed to journalists outside the historic place around midnight.

The positive tone offered a certain relief to investors who feared an escalation in trade tensions. The markets responded with limited enthusiasm – the term contracts on American actions have dropped lower, the Yuan Offshore remained stable and the CSI 300 index of China has won almost 1%, marking its best day for weeks.

“The markets will probably welcome the transition from confrontation to coordination,” said Charu Chanana, chief investment strategist at Saxo Markets. “We are not yet out of the woods – it’s up to Trump and Xi to approve and enforce the agreement.”

If it is approved, the provision of rare earths should act as a springboard to resolve controversial disputes on steel and aluminum prices, industrial overcapacity and digital services taxes – which have all been heavy on bilateral trade since 2018.

The puzzle of flea for metals

Lutnick has suggested the Washington concessions which would facilitate the controls imposed by national security reasons.

“There have been a number of measures that the United States of America brought when these rare land did not arrive,” he said. “You should expect them to stand out – in a way, like President Trump, said, in a balanced way.”

This “balance” is however delicate. Export controls on semiconductor technologies and AI supply software remains politically loaded in Washington, where Hawks maintain that loosening restrictions could allow the military and monitoring capacities of Beijing. But Trump officials now seem to be willing to take advantage of some of these restrictions to obtain concessions in other areas, in particular access to rare land.

Wendy Cutler, a former senior American trade manager, qualified the “unprecedented” work quarter, warning that the sustainability of the agreement depends on the sustained political will.

“It took two days, three members of the American cabinet and a Chinese Deputy Prime Minister just to start maintaining the Geneva Agreement,” she wrote on LinkedIn. “It’s an overview of the next 60 days.”

What is the next step: 60 days to solve wider problems

The Geneva Agreement in May set a 90 -day break on reprisal rates, which will expire in early August. The current framework on rare earths buys time, but trade remains volatile. US imports from China have dropped sharply in May, marking the worst contraction since the beginning of 2020, when the Chinese economy was closed by COVID.

Among the unresolved problems, there is the industrial overcapacity of China – in particular in steel, solar panels and electric vehicles – which, according to the United States, has led to global price distortions. In addition, the Trump administration has pressed China for measurable action on the production of fentanyl, a problem he cited to take a tariff of 20% earlier this year.

“President Trump looks closely at fentanyl,” said Jamieson Greer. “We would be able to see the progress of the Chinese on this issue in a major way.”

No other meeting is currently planned, but the two parties say that discussions will continue remotely. “We hope that the progress we have made will be conducive to building confidence,” added Li Chenggang.

Beyond the commercial data, what has been damaged by the impasse of years is confidence. According to Josef Gregory Mahoney, professor of international relations at the East China Normal University, “we have heard a lot about the agreements on talks, but the fundamental problem remains: Chips vs Rare Earths. Everything else is a peacock dance. ”

However, many believe that the rare earth agreement can mark the start of a pragmatic phase. If the two leaders approve the proposal, this could open the door to more substantial discussions – not only on trade, but on global supply chains, climate coordination and digital governance.