• Negotiations between U.S. and Chinese officials paused after six hours of discussions on rare earth minerals and tariffs.
  • Talks will resume at 8 PM London time, with Commerce Secretary Howard Lutnick playing a key role in export control discussions.
  • Rare earth export restrictions remain a sticking point as both sides seek to avoid reinstating higher tariffs later this summer.

High-Stakes Talks Continue

Trade negotiations between the U.S. and China entered their second day in London on Tuesday, with discussions pausing after an intensive six-hour session at Lancaster House near Buckingham Palace. The talks, which began Monday, are set to resume at 8 PM local time, according to officials familiar with the matter.

The U.S. delegation, led by Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, is pressing China to lift its April 2025 restrictions on rare earth mineral exports—a move that rattled global tech supply chains. "We need these materials flowing again for everything from electric vehicles to defense systems," one American negotiator said, speaking on condition of anonymity.

Rare Earths and Tariffs Dominate Agenda

China's control over 80% of global rare earth production gives it significant leverage in these talks. The current restrictions on neodymium and terbium exports have already caused price spikes for manufacturers. Meanwhile, both nations maintain the threat of reinstating higher tariffs if no agreement is reached by August.

Commerce Secretary Lutnick, the former Cantor Fitzgerald CEO, has reportedly taken a leading role in discussions about export controls and technology transfers. His presence underscores the Biden administration's focus on securing critical supply chains while maintaining competitive advantages in advanced technologies.

What Comes Next

While neither side has characterized the talks as "make-or-break," the continuation into evening sessions suggests substantive negotiations are underway. Market watchers will be monitoring any signals about potential compromises on rare earth exports or tariff reductions. As one European trade analyst noted: "When they're still talking after dinner, that's usually when the real work gets done."