Rutnik, Optimistic about US-China trade talks
As delegations from the US and China begin the second day of trade talks, U.S. Secretary of Commerce Howard Lutnick said things were “going well.”
Bloomberg
LONDON, June 10 (Reuters) – US and Chinese officials on Tuesday agreed to a framework to bring the trade ceasefire back on track and remove China’s export restrictions on rare earths, but said there are few indications of a durable solution to long-standing trade tensions.
At the end of two days of intense negotiations in London, U.S. Commerce Secretary Howard Lutnick said the deal would place the “meat” of the agreement to ease bilateral retaliation tariffs that reached triple-digit crushing levels in order to place the “meat” of the agreement reached in Geneva last month.
But the Geneva deal has hampered China’s continued curbs on serious mineral exports, and the Trump administration has urged it to respond with its own export controls that prevent the shipment of semiconductor design software, aircraft and other goods to China.
Lutnick said the agreement reached in London would remove “in a balanced way” restrictions on rare earth minerals and magnets, as well as some of the recent US export restrictions, but did not provide details after consultations ended around midnight in London (2300 GMT).
“We have arrived at a framework for implementing the Geneva consensus and a call between the two presidents,” Rutnick said, adding that both parties will return to present the framework to their respective presidents for approval.
“And if that’s approved, we implement the framework,” he said.
In another briefing, China’s Deputy Commerce Minister Li Chenggang said that in principle we will reach the trade framework and be reclaimed by us and the Chinese leaders.
US President Donald Trump’s changing tariff policies have hit global markets, caused congestion and disruption at major ports, costing billions of dollars in businesses with losses in sales and increased costs.
On Tuesday, the World Bank cut its global growth forecast for 2025 to 2.3%.
The deal could prevent the Geneva agreement from unlocking duel export restrictions, but it rarely resolves deep differences in the longstanding US complaints about Trump’s unsolved tariffs and China-led, export-led economic model.
Josh Lipsky, senior director of the Center for Geography and Economics at the Atlantic Council in Washington, said the two sides should leave a fundamentally different view of the terms of the agreement and be more specific about the terms of the agreement.
“They’re back in Square One, but that’s way better than square zero,” added Lipsky.
Both sides will need to negotiate a more comprehensive agreement to alleviate trade tensions until August 10th. Alternatively, the tariff rate will return from about 30% to 145% on the US side, and from 10% to 125% on the Chinese side.
I’m careful
Global stocks have now recovered a massive loss after Trump’s “liberation day” tariff announcement in April, and are now nearing record highs. Burned by early turmoil, investors provided a careful response to MSCI’s broadest index of Asia-Pacific stocks outside of Japan. MIAPJ000000PUS has increased by 0.57%.
“The devil is detailed, but the lack of response suggests that this outcome was fully expected,” said Chris Weston, director of research at Pepperstone in Melbourne.
“While details are important, especially regarding the degree of US-bound rare earths and the degree of freedom that US-produced chips have turned east, for now, risk assets should continue to be supported, as long as the headlines of meetings between the parties remain constructive.”
Signs of curbs loosened in China have emerged in China as several deep Shenzhen listed rare earth magnet companies, including JL Mag Mag Rare-earth300748.SZ Innuovo Technology 000795.SZ and Beijing Zhong KE San Huan 000970.SZ, are loosened in China.
China holds almost monopoly on rare earth magnets, rare earth magnets, key components of electric vehicle motors, and the decision to suspend exports of a wide range of important minerals and magnets in April.
In May, the US responded by halting the shipment of semiconductor design software and chemicals and aviation equipment and revoking previously issued export licenses.
China’s exports plummeted
Trade war resolutions may require policy adjustments from all countries to treat financial imbalances. Otherwise, we will risk a great deal of mutual economic damage, European Central Bank President Christine Lagarde said he had made a rare visit to Beijing on Wednesday.
Customs data released on Monday showed that China’s total exports to the US plummeted at 34.5% in May.
While US inflation and its impact on the job market have been curtailed so far, tariffs have hampered the trust of American businesses and families, and the dollar is under pressure.
Beijing-based lawyer Peter Wu, 28, said the consultation was considered a “good signal” even if details were not fully negotiated.
“I feel that fighting a trade war in the context of global integration is a situation of loss for both parties. Naturally, I hope that my country will be better,” he said.
According to documents released Tuesday, China, Mexico, the European Union, Japan, Japan, Canada, and many airlines and aerospace companies have urged the Trump administration not to impose new national security tariffs.
Shortly after the framework’s deal was announced, the US Court of Appeals allowed Trump’s most drastic tariffs to take effect.
The decision lives on a key point of pressure on China, with Trump currently halting the 34% “mutual” obligation that prompted a rapid tariff escalation.
(Additional reporting by David Milliken and William James of London and Sachin Ravikumar; Written by Ethan Wang, Shi Bu, Yuhan Lin, Alessandro Diviggiano in Beijing, David Lawder, Kate Holton, Liz Lee, Edited by David Evans, Mark Potter, Nick Zieminski, and Lincoln Feast)
