Rare earths, visas and chips take the center stage as US-China resume trade talks in London

Top trade negotiators from the United States and China are meeting in London on June 9 in a high-stakes bid to defuse rising tensions between the world’s two largest economies.

The talks come after a brief thaw in Geneva last month and a phone call between President Donald Trump and Chinese President Xi Jinping last week, signalling a potential path back to cooperation.

The meeting in London, hosted at an undisclosed venue, includes US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer. They are set to meet a Chinese delegation led by Vice Premier He Lifeng.

The negotiations aim to rescue a 90-day tariff truce agreed upon in Geneva, which has since been marred by mutual recriminations and renewed hostilities.

The UK, while not directly involved in the negotiations, welcomed the talks. “We are a nation that champions free trade and have always been clear that a trade war is in nobody’s interests,” a UK government spokesperson said on June 8.

Rare earths and export controls at the heart of dispute

Central to the impasse is China’s dominance over rare earth elements—vital for manufacturing smartphones, electric vehicles (EVs), military equipment, and semiconductors.

Beijing recently restricted exports of seven rare earth elements, citing the need for tighter licensing, which disrupted global supply chains. The US responded with strong criticism, accusing China of violating the Geneva agreement.

President Trump, however, sounded optimistic after his recent call with Xi, claiming the Chinese leader had agreed to resume rare earth shipments.

“We want the rare earths, the magnets that are crucial for cell phones and everything else to flow just as they did before,” National Economic Council Director Kevin Hassett told CBS on June 8.

China’s Commerce Ministry confirmed it had approved some export licences, though without detailing specific recipients or sectors.

Technology, tariffs, and student visas add to the strain

The trade war, initially characterised by tit-for-tat tariffs that reached as high as 145 per cent, has now spilled into technology and education.

A US Commerce Department guidance issued just days after the Geneva meeting warned that chips from Chinese tech giant Huawei could violate US export restrictions, reigniting tensions.

The Chinese government was quick to condemn the move. “The Chinese side urges the US side to immediately correct its erroneous practices,” said a spokesperson from China’s Ministry of Commerce.

Another sore point has emerged around US policy changes affecting Chinese students. A US announcement to revoke visas of students linked to the Chinese Communist Party or those studying in sensitive fields further agitated Beijing. China labelled it a unilateral provocation that undermines the spirit of the Geneva agreement.

Market optimism tempered by geopolitical uncertainty

Financial markets opened the week on a positive note, buoyed by Friday’s US jobs report and optimism surrounding the London talks.

The MSCI Asia-Pacific Index rose 0.5 per cent, Japan’s Nikkei gained 0.9 per cent, and Hong Kong’s Hang Seng Index climbed 1.3 per cent, breaching the 24,000-point mark for the first time since March.

On Wall Street, stocks had already surged on June 6 after the Labor Department reported the US added 139,000 jobs in May, modestly ahead of expectations. Investors are now watching closely for inflation data set to release on June 11, which could influence the Federal Reserve’s interest rate trajectory.

Despite the positive momentum, analysts remain cautious. “Signs of further momentum in talks could give the markets a fresh boost to kick off the week,” Kyle Rodda of Capital.com told AFP. But he also noted, “Trade policy will remain the big macro uncertainty.”

Challenges beyond trade

Even if the June 9 discussions produce some progress, deeper issues continue to threaten long-term resolution. These include US complaints about China’s state-led economic model, Beijing’s posture toward Taiwan, and tensions over the illicit fentanyl trade.

The outcome of this new round of talks could determine whether Washington and Beijing are able to stabilise their fractious relationship or spiral into a renewed trade war.

Trump’s reprieve on tariffs is set to expire in August, and without a firm deal, he has threatened to restore duties to the high levels set earlier this year.

While the US seeks clarity on rare earths and export controls, China is pushing for a rollback of technology restrictions and assurances over market access. Both sides appear willing to talk, but with vastly different expectations, the road to resolution remains long and uncertain.