US-China trade talks yield framework: will rare earths and tariffs ease?

After intense negotiations in London, US and China have agreed on a framework to implement the Geneva consensus, potentially easing export restrictions on rare earth minerals and AI semiconductors. This development has fueled optimism in global markets, with the S&P 500 and Nasdaq nearing record highs and oil prices rising for the fourth day, highlighting the high stakes for global supply chains and economic growth.

Sources:
ReutersTradingview+9
Updated 11h ago
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Sources: ReutersMoneycontrolLivemint+5
U.S.-China trade talks in London have extended into a second day, focusing on easing tensions over rare earth mineral exports and tariffs that threaten global supply chains.
The discussions, described by U.S. Commerce Secretary Howard Lutnick as "going really well," involve high-level officials from both countries working to resolve export controls on critical materials like rare earth elements and AI-capable semiconductors.

"We're doing well with China. China's not easy," U.S. President said, reflecting cautious optimism without revealing details.

China's earlier suspension of exports on critical minerals disrupted industries including aerospace, semiconductors, and military manufacturing, raising fears of a global supply shock.

"The inclusion of Lutnick, whose agency oversees export controls for the U.S., is one indication of how central rare earths have become," highlighting the strategic importance of these materials.

Markets have responded with modest gains: the S&P 500 rose 0.5%, nearing record highs, while oil prices climbed amid optimism.

"Crude has preemptively priced in a degree of success in the US-China trade talks," said Vandana Hari, founder of Vanda Insights.

Despite progress, concerns remain over the broader impact on global supply chains and economic growth, as China's exports to the U.S. fell 34.5% year-over-year in May.

Analysts caution that while a temporary truce is possible, long-term constructive relations are uncertain due to ongoing decoupling trends and geopolitical pressures.

"We wouldn’t bank on a big turnaround thanks to any potential trade breakthroughs," said Capital Economics.

The talks follow a tentative Geneva agreement to pause steep tariffs, with hopes to avoid further escalation and improve market stability.

The negotiations continue to be closely watched by investors worldwide, with the potential to influence global economic growth and supply chain resilience.
Sources: ReutersMoneycontrolLivemint+2
U.S.-China trade talks in London extended into a second day focusing on rare earth minerals and tariffs, with officials describing progress as "going well." Both sides aim to ease export restrictions amid fears of global supply chain disruptions, while markets respond cautiously to the evolving negotiations.
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The Headline

US-China talks yield tariff pause framework, markets rally

The discussions are going really well and we expect to wrap up soon, but officials will be present if needed.
US Commerce Secretary Howard Lutnick
Livemint3
We're doing well with China. China's not easy. I'm only getting good reports from my team in London.
President Donald Trump
ReutersM
Key Facts
  • US-China trade talks began in London focusing on rare earth minerals and AI semiconductor export controls amid ongoing tariff tensions.ReutersMoneycontrol2
  • Both sides agreed to a 90-day tariff pause following a tentative agreement reached in Geneva last month, aiming to de-escalate the trade war.Timesofindia
  • US Commerce Secretary Howard Lutnick joined the talks, emphasizing the centrality of export controls and describing the discussions as fruitful and going well.MoneycontrolLivemint3
  • Trade talks extended into a second day in London with officials working late to resolve technical issues, signaling commitment to reach a deal.Tradingview2
  • US stock markets responded positively to the trade talks, with the S&P 500 rising 0.5% and Nasdaq gaining 0.6%, both nearing record highs amid growing optimism.
  • Oil prices rose for the fourth consecutive day, with Brent crude above $67 a barrel and WTI topping $65, reflecting investor confidence in trade talk progress and market tightness.Livemint
  • The US and China reached a framework to implement the Geneva consensus, signaling a potential de-escalation of trade tensions and a step toward resolving disputes.CnbcBloomberg
Key Stats at a Glance
Duration of tariff pause agreed by US and China
90 days
Timesofindia
S&P 500 increase
0.5%
Tradingview
Dow Jones Industrial Average increase
100 points
Tradingview
Nasdaq increase
0.6%
Tradingview
Brent crude oil price
$67 a barrel
Livemint
West Texas Intermediate crude oil price
$65 a barrel
Livemint

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Background Context

China's export restrictions disrupt supply chains amid tensions

While a temporary truce was possible, there was little prospect for the bilateral relationship to become constructive given broader decoupling trends and continued U.S. pressure on other countries to take China out of their supply chains.
Ian Bremmer
President of Eurasia Group
Reuters
Key Facts
  • China imposed export restrictions on critical minerals and magnets, disrupting global supply chains vital to aerospace, semiconductor, and military industries.Reuters
  • China's export restrictions have caused a sharp 34.5% year-over-year drop in exports to the US in May, the steepest since early 2020, raising concerns over supply chain stability.Moneycontrol1
  • Rare earth minerals have become central to the trade dispute, with the US agency overseeing export controls highlighting their importance in the talks.Reuters
  • Broader geopolitical tensions and decoupling trends limit prospects for a fully constructive US-China relationship despite temporary trade truces.Reuters
Key Stats at a Glance
Year-over-year drop in China's exports to US in May
34.5%
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