Second Round of US–China Trade Talks in London: Tug-of-War Over Tariffs and Critical Mineral Exports

Trade relations between the United States and China have entered another crucial phase with the second round of trade talks held in London. The meeting was led by US Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, who sat down with China’s Vice Premier He Lifeng. The main goal of this forum is to ease escalating tensions caused by tariff disputes, rare mineral exports, and technology restrictions. Held at Lancaster House in London, this meeting is seen as pivotal for the future of economic relations between the two countries, with direct impact on global markets.

Diplomacy Amid Tariff Tensions

The ongoing trade war between the US and China over the past years has had significant repercussions for the global economy. In Geneva last May, both countries agreed to a 90-day tariff truce, slashing tariffs by up to 30% for US goods and 10% for Chinese products. However, this commitment was marred by mutual accusations of violations, making the London agenda a test for both sides’ credibility. The US delegation aims to stabilize domestic markets, while China seeks to ensure its key exports—especially rare earth minerals—continue to reach American industries.

Focus on Critical Mineral Exports

One of the most crucial issues in this round of talks is the export of rare earth minerals from China to the US. These minerals are the backbone of the automotive, high-tech, and defense sectors. The US is pressing China to loosen restrictions on these vital minerals, while China wants easier access to advanced US technologies like semiconductors and jet engines. In recent months, Chinese exports to the US have plunged by 34.5% year-on-year, sparking concerns about deflation and economic slowdown.

Economic Impact and Market Response

The global market’s sentiment is directly affected by the dynamics of these trade negotiations. US stock markets such as the S&P 500 and Nasdaq have rallied, driven by hopes of concrete progress in London. Asian markets have also responded positively to the commencement of this high-level dialogue. Meanwhile, global investors are closely monitoring developments in US bond auctions and inflation data, which could amplify the impact of the negotiations’ outcome.

Other Strategic Issues: Technology and Geopolitics

Beyond tariffs and mineral exports, the London talks also address strategic issues such as restrictions on Chinese student visas, fentanyl control, and the Taiwan issue. The US government has highlighted the threat of fentanyl, while China has emphasized that the Taiwan issue should not be used as a provocation in US foreign policy. This dialogue shows that trade negotiations are not merely about economics, but are also deeply intertwined with geopolitics.

Limitations and Negotiation Outlook

Despite the intense dialogue, analysts expect only short-term agreements to emerge. Both countries are predicted to agree mainly on technical cooperation, such as increased exports and fentanyl control, without significant structural reforms. China’s state-controlled economic model and the US’s fluctuating policies are the main obstacles to substantive progress. The tariff truce is also set to expire in August 2025, keeping global markets wary of the next potential tensions.

Strategic Moves and the Future of Trade Relations

Although no major breakthroughs have been achieved, the London meeting serves as an important momentum to keep communication channels open between the US and China. Both sides have agreed to issue export licenses for rare earth minerals to the US automotive industry—a small step indicating willingness to maintain stability. Optimistic statements from President Trump and China’s cautious approach show that further negotiations will be necessary going forward.