United States: A renewed bout of economic diplomacy has been ignited between Washington and Beijing as both juggernauts endeavor to uphold a delicate ceasefire formed last month. These high-stakes negotiations commenced on British soil, quietly orchestrated following a long-anticipated conversation between President Donald Trump and China’s Xi Jinping, whose dialogue subtly thawed a month-long frost sparked by an unexpected accord in Geneva.
Earlier in May, both powers vowed to peel back tariffs for 90 days—a move that momentarily brightened spirits. Yet that brief optimism crumbled under the weight of two stubborn disputes: China’s hold on rare earth resources and its desire for semiconductor access originating from American soil.
As Monday dawned, the pivotal issue of China’s export flow of rare earth materials and magnetic components was set to dominate the London dialogue. Insiders confirmed to CNN that conversations were active, a report seconded by China’s state media, Xinhua.
Experts widely agree: Beijing is unlikely to surrender its strategic chokehold on these rare minerals—indispensable ingredients in everything from electric cars to advanced weaponry.
“Beijing’s mastery over rare earth exports has evolved into a quiet, yet potent, geopolitical lever,” penned Robin Xing of Morgan Stanley in a fresh research memo. “With a nearness to monopoly in this sphere, rare earths remain a critical pawn in the trade grand game,” according to CNN.
Tensions and Trade Cards: Rare Earths Take Center Stage
Post-Geneva, President Trump charged Beijing with throttling the rare earth supply, simultaneously layering further limits on chip exports and even dangling the possibility of revoking student visas for Chinese nationals. This escalated the Washington-Beijing strain, with China perceiving it as a breach of prior commitments.
As the London summit unfolds, the crux lies in whether both factions can bridge vast gulfs on deeply-rooted concerns. The American trio—Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Envoy Jamieson Greer—face off with a team helmed by China’s Vice Premier He Lifeng.
Trump’s Offer: A Strategic Unfastening
Sources disclosed that President Trump has greenlit his trade squad to soften certain export controls once deemed non-negotiable due to security worries. While precise concessions remain under wraps, there’s clarity that restrictions on cornerstone technologies—vital to America’s edge—won’t be bargained away easily.
In return, Washington eyes an unshackled stream of rare-earth flows from Beijing.
On Saturday, China’s Commerce Ministry appeared to extend an olive branch, noting it had approved “a select batch of compliant applications” for exports.
“China stands ready to broaden communication channels with relevant partners to ease regulated trade,” a ministry spokesperson stated.
Behind Closed Doors: High-Wire Trade Balancing
Kevin Hassett, chief of the White House National Economic Council, voiced optimism about progress. Speaking to CBS, he noted that while mineral exports have resumed at a higher velocity than before, they still lag behind the Geneva pace.
Appearing on CNBC Monday, Hassett reiterated China’s outsized influence—controlling roughly 90% of global rare earth production. A bottleneck, he warned, could paralyze US manufacturers reliant on these inputs, like the auto industry. Trump, taking this seriously, reportedly rang Xi himself to demand swifter movement—something Xi apparently agreed to.
Hassett hinted that Washington could ease chip restrictions that China deems essential for its factories—excluding the ultra-high-end Nvidia chips, still under lock due to security grounds. These AI-enabling chips had been restricted under the Biden administration, a stance Trump continues.
Rare Earth: Beijing’s Most Valuable Trump Card
In April, amid tit-for-tat skirmishes, Beijing slapped a licensing framework on seven rare earths and multiple magnets, demanding documentation for every shipment.
After Geneva’s handshake, the US expected a reversal. Yet Beijing’s stalling drew ire in the White House, insiders told CNN.
Rare earth—though scattered across global terrain—is costly, toxic, and arduous to extract. While the US has deposits, nearly all refinement flows through China.
Some analysts say Beijing may wield this rare earth dominance as leverage to unlock access to US semiconductors—especially as chip embargoes persist.
The American Chamber of Commerce in China stated that limited six-month export licenses have trickled out to Chinese vendors supplying US giants like GM, Ford, and Stellantis. Still, analysts forecast that access will remain throttled relative to pre-April norms.
“Even before President Trump stiffened tariff policy, Beijing had weaponized export controls to entrench dominance in strategic domains,”
stated Leah Fahy and her team at Capital Economics in a Friday dispatch.
A Clouded Outlook for Beijing’s Economy
China’s economic engine is sputtering under the weight of tariff clashes. New data paints a bleak image for its export-dependent growth.
In May, overseas shipments crept up a mere 4.8%—a stark drop from April’s 8.1% jump and shy of economists’ 5% expectations. Shipments to the US nosedived by 34.5%, worsening from April’s 21% decline—even after the May 12 truce, which slashed US tariffs from 145% to 30%.
Despite these challenges, customs spokesperson Lü Daliang projected confidence, telling Xinhua that China’s trade remains
“resilient amid external tremors.”
Meanwhile, the specter of deflation shadows the economy. The Consumer Price Index dipped 0.1% year-over-year, signaling soft domestic demand. Factory-level prices, tracked by the Producer Price Index, plunged 3.3%—marking the sharpest fall in nearly two years.
Dong Lijuan, NBS’s lead statistician, attributed this to falling global energy prices and weak demand for raw materials—exacerbated by an unusually high comparison base from last year.