IRIA News

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Senior U.S. and Chinese officials have announced a breakthrough after two days of intense, closed-door talks held at Lancaster House in London, a historic mansion near Buckingham Palace.

The agreement, while lacking in detailed implementation steps, is a critical attempt to stabilize a fragile truce that was first reached in Geneva last month but quickly teetered due to renewed disputes over technology, rare earth minerals exports, and semiconductors.

“First, we had to get sort of the negativity out, and now we can go forward,” U.S. Commerce Secretary Howard Lutnick told reporters following the conclusion of the talks late Tuesday evening.

President Donald Trump said he was “very happy” with a trade deal that restored a fragile truce in the U.S.-China trade war, after negotiators agreed on a framework covering tariff rates. “We made a great deal with China. We’re very happy with it,” Trump said. “We have everything we need, and we’re going to do very well with it. And hopefully they are too.”

A resumption, not a resolution

The talks in London were a response to a phone call between U.S. President Donald Trump and Chinese President Xi Jinping, aimed at salvaging the Geneva agreement.

The preliminary pact, which temporarily froze new tariff impositions for 90 days, was seen as a necessary first step toward broader trade normalization. However, sharp disagreements resurfaced almost immediately, particularly over China’s export curbs on rare earth minerals and U.S. restrictions on semiconductor technology.

Li Chenggang, China’s Vice Minister of Commerce, confirmed that the two sides had “agreed in principle on a framework for implementing the consensus reached on the phone call and at the talks in Geneva,” according to China’s state-run news agency.

The Chinese delegation was led by Vice Premier He Lifeng and included Commerce Minister Wang Wentao. On the American side, Lutnick was joined by Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer.

No public draft of the framework has been released, and key enforcement mechanisms remain unclear. However, both sides acknowledged that the agreement would now be presented to their respective leaders for final approval.

One of the most contentious issues, the export of rare earth minerals, appears to have been partly resolved. China, the world’s dominant supplier of these crucial elements used in everything from electric vehicles to advanced weaponry, has agreed to speed up export license approvals. In return, Lutnick indicated that the U.S. would scale back some of its retaliatory export restrictions.

“When they approve the licenses, then you should expect that our export implementation will come down as well,” Lutnick said, though he did not specify which U.S. measures would be rolled back.

It was fantastic to team up with Secretary Scott Bessent and Ambassador Jamieson Greer. World-class team delivering world-class results for America. pic.twitter.com/hWxj1xyNv9

— Howard Lutnick (@howardlutnick) June 11, 2025

Trump himself provided a rare window into the behind-the-scenes negotiations on his Truth Social account: “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!).”

Still, Treasury Secretary Bessent drew a clear line on semiconductor exports, stating unequivocally: “There is no quid pro quo in terms of chips for rare earths.”

The tariff landscape

The deal also covers tariffs, though the numbers present a complex and heavily politicized picture. Trump announced that the U.S. will maintain a fixed 55% tariff rate on Chinese imports, an aggregation of previously imposed penalties.

According to a White House official, the 55% rate includes:

• A 10% “reciprocal” tariff applied broadly across trading partners,
• A 20% tariff specific to China, Mexico, and Canada over alleged fentanyl trafficking,
• A pre-existing 25% tariff on Chinese imports from Trump’s first term.

“You can say that,” Lutnick affirmed during an interview when asked if the tariff levels were fixed and unchangeable.

From China’s side, the gesture of lifting rare earth export restrictions is significant, though it is widely seen as transactional rather than a long-term policy shift.

Cautious optimism

Markets responded with measured optimism. Asian stock indices rose modestly on Wednesday morning, but U.S. markets showed restraint.

“It’s a done deal, according to President Trump, but we haven’t seen any details, which is why I think the market is not reacting to it yet. As with just about everything, the devil is in the details,” said Oliver Pursche, senior vice president at Wealthspire Advisors.

Former U.S. trade negotiator Wendy Cutler voiced concern that time is running out to achieve substantive change. “The U.S. and China lost valuable time in restoring their Geneva agreements,” said Cutler, now vice president at the Asia Society Policy Institute. “Now, only sixty days remain to address issues of concern, including unfair trade practices, excess capacity, transshipment, and fentanyl.”

Broader economic impact

The World Bank recently cut its global growth forecast for 2025 to 2.3%, warning that heightened trade tensions and tariff uncertainty pose significant headwinds for most major economies. The prolonged U.S.-China trade war has disrupted supply chains, inflated consumer prices, and reduced investor confidence.

With roughly 60 days left before the Geneva agreement expires on August 10, negotiators have precious little time to hammer out a full and enforceable deal. Whether the two largest economies in the world can move beyond short-term fixes and reach a lasting trade agreement remains to be seen.