London talks result in US-China “framework” on trade
On Tuesday, US and Chinese trade negotiators concluded two days of talks in London.
The result: An agreement “in principle to a framework” that will codify recent trade discussions between the US and China.
- The negotiating teams will submit the framework for approval by their respective leaders.
Some context: For weeks, the fragile Geneva trade truce appeared in danger of unraveling due to US frustrations over Chinese export controls on rare earth elements (REEs).
- However, it looks like last week’s timely call between Xi Jinping and US President Donald Trump cleared the air.
Neither side has released details of the framework, but US Commerce Secretary Howard Lutnick said the resolution of export controls on REEs was a “fundamental” part of the agreement (Reuters).
- He also suggested that US economic restrictions announced since the Geneva deal would “come off…in a balanced way.”
On Wednesday morning, Trump seemed to confirm Lutnick's comments in a Truth Social post:
- "FULL MAGNETS, AND ANY NECESSARY RARE EARTHS, WILL BE SUPPLIED, UP FRONT, BY CHINA."
- "LIKEWISE, WE WILL PROVIDE TO CHINA WHAT WAS AGREED TO, INCLUDING CHINESE STUDENTS USING OUR COLLEGES AND UNIVERSITIES (WHICH HAS ALWAYS BEEN GOOD WITH ME!)"
China’s head negotiator, Li Chenggang, expressed hope that the meeting would facilitate “the steady and healthy development of economic and trade ties” (Xinhua).
Glass half-full: The London framework could allow the US and China to move beyond the REE impasse to discuss other trade issues and establish a new modus vivendi.
Glass half-empty: There are still large tariffs, as well significant restrictions on trade and investment between the two economies.
- And with numerous points of contention in the bilateral relationship, there is no guarantee that relations won't take a turn for the worse in the days and weeks ahead.