The United States and China are set to resume high-level trade talks in the UK after a month, this time focusing on the export controls on core raw materials and technology rather than tariffs. Notably, the U.S. is expected to push China to lift its restrictions on rare earth exports.
Kevin Hassett, Director of the National Economic Council (NEC) of the U.S., addressed the trade negotiations with China during a CBS News interview on Sunday. He stated that exports of critical minerals from China to the U.S. are occurring at a faster pace than before, but not as quickly as they thought they had agreed upon in Geneva.
Between February and April this year, the U.S. and China engaged in a trade war, imposing retaliatory tariffs of 145% and 125% on each other, respectively. However, they reached a partial agreement on May 10-11 in Geneva, Switzerland, agreeing to reduce the retaliatory tariffs by 115 percentage points for 90 days.
Despite this agreement, China has continued to restrict its rare earth exports, leading to ongoing tensions with U.S. President Donald Trump. On April 4, China introduced a permit system for the export of seven types of rare earths, implementing export controls alongside the retaliatory tariffs. According to the U.S. Geological Survey (USGS), China accounted for 69.77% of the world’s rare earth production last year. Rare earths, a group of 17 metallic elements that are extremely rare in nature, require a significant amount of energy during production and cause unavoidable environmental damage. Consequently, both developing and developed countries find it challenging to exploit these resources, allowing China to capitalize on the situation and enhance its production capacity.
On Thursday, Trump had his first direct call with Chinese President Xi Jinping since his inauguration this year. When asked by local media if Xi had agreed to resume rare earth exports to the U.S., Trump replied, “Yes.” Additionally, Trump announced on Friday that he would send U.S. officials, including Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative (USTR) Jamieson Greer, to London on Monday to resume high-level negotiations with China. As in the Geneva agreement, Chinese Vice Premier He Lifeng will represent China.
On Saturday, China’s Ministry of Commerce stated on its website that it had approved several rare earth export applications. It emphasized China’s intention to strengthen communication and dialogue on export controls with related countries and promote trade in compliance with regulations.
During the interview on Sunday, Hassett expressed optimism for positive outcomes from the high-level talks on Monday, stating that the U.S. wants the influx of rare earths, which are critical for smartphones and everything else, to resume as it was before early April. He added that they do not want any technical details to delay the flow.
On Sunday, The Wall Street Journal (WSJ) analyzed that both the U.S. and China have recently focused on lifting export controls rather than tariffs. It speculated that China might demand the U.S. lift export controls on semiconductors or nuclear power plant equipment in exchange for resuming rare earth exports.
