US, China reach deal to ease export controls
What's the story
The United States and China have reportedly agreed on a preliminary trade deal framework after two days of talks in London. The agreement aims to ease tensions and reduce export restrictions impacting global manufacturing. US Commerce Secretary Howard Lutnick said the deal would resolve China's export curbs on rare earth minerals and magnets to the US, a key sticking point in previous negotiations.
Details
Framework to implement Geneva consensus
Lutnick said the framework adds "meat on the bones" of a deal made last month in Geneva to ease retaliatory tariffs. He added, "We have reached a framework to implement the Geneva consensus and the call between the two presidents." China's Vice Commerce Minister Li Chenggang also confirmed that a trade framework had been reached, which would be taken back to US President Donald Trump and Chinese President Xi Jinping for approval.
Key issues
Deal specifics undisclosed
While the specifics of the deal remain undisclosed, Lutnick hinted that both sides had agreed to ease export controls on goods and technologies that are crucial to the other. He said the rare earth minerals and magnets issue would be resolved as a "fundamental" part of the framework agreement. "Also, there were a number of measures the US put on when...rare earths were not coming..You should expect those to come off...as President Trump said, 'In a balanced way,'" he added.
Strategic advantage
Strategic advantage
Since April, when Beijing implemented new licensing regulations on specific minerals in response to Trump's tariffs, China's overseas shipments of rare earths have plummeted. This has posed a threat to industries worldwide, including electronics, defense, energy, and vehicle manufacturing. China has a near-monopoly on rare earth minerals and associated magnets, which are vital to American industries and defense and are used in everything from automobiles to fighter jets.
Historical context
Tariff war
Following a phone call between Trump and Xi last week, Trump said Xi had agreed to resume rare earth minerals and magnets exports. However, he did not clarify the speed or volume of these exports. The Geneva pact, which temporarily cooled tensions, reduced new US tariffs on Chinese goods from 145% to 30% and Chinese countermeasures from 125% to 10%. The two sides have until August 10 to reach a more comprehensive agreement to reduce trade tensions.