Lutnick says U.S.-China trade talks going well on second day

U.S. Commerce Secretary Howard Lutnick said on Tuesday that trade discussions with China were progressing positively, as officials from both nations met for a second day in London.

The meetings aim to resolve disputes over export controls, which have recently threatened to reignite tensions between the two global powers.

The talks follow Washington's accusations that Beijing was obstructing shipments of rare earth minerals, resources vital to the U.S. economy. This has put a strain on relations, despite a preliminary agreement reached in Geneva last month to ease away from a potential full-scale trade conflict.

White House economic adviser Kevin Hassett mentioned on Monday that the U.S. is open to lifting some export restrictions on semiconductors if China accelerates its deliveries of rare earth materials and magnets.

"The discussions went on all day yesterday and are continuing today", Lutnick told reporters. "They're going well and we’re spending a lot of time together".

President Trump's unpredictable tariff policies have caused turmoil in global markets, led to backlogs and uncertainty at major ports, and inflicted tens of billions of dollars in losses on businesses due to rising costs and reduced sales.

However, markets have mostly recovered since Trump introduced his sweeping "Liberation Day" tariffs in April, helped by the progress made in Geneva between the two economic giants.

This second round of talks comes at a crucial moment, following a rare phone call between Trump and Chinese President Xi Jinping last week. The timing is significant, particularly as customs data released Monday revealed a 34.5% drop in China's exports to the U.S. in May, the steepest decline since the start of the COVID-19 pandemic.

Although the effects on U.S. inflation and employment have been limited so far, the tariffs have eroded business and consumer confidence, and the U.S. dollar remains under pressure.

Navigating Differences

The negotiations are being led by U.S. Treasury Secretary Scott Bessent, Commerce Secretary Lutnick, and Trade Representative Jamieson Greer, while Vice Premier He Lifeng heads the Chinese delegation.

Talks lasted nearly seven hours on Monday and resumed Tuesday morning around 10:00 GMT. Both sides are expected to release updates later in the day.

Lutnick's presence- his agency oversees export controls, underscores how central rare earths have become in these negotiations. He was not part of the earlier Geneva discussions, where the U.S. and China agreed to a 90-day pause on some of the high tariffs they had imposed on each other.

China's near-monopoly on rare earth magnets, critical for electric vehicle motors, and its decision in April to halt exports of various essential minerals, has disrupted global supply chains and alarmed industries worldwide.

Kelly Ann Shaw, a former White House trade adviser and now a trade partner at Akin Gump in Washington, said she expects China to recommit to lifting its retaliatory trade measures, including export bans. In return, she believes the U.S. may offer limited relief on recently imposed export controls, but not on more sensitive items like advanced AI chips.

In May, the U.S. suspended shipments of semiconductor design tools, certain chemicals, and aviation equipment by revoking previously granted export licenses.

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