The United States and China have worked out a plan to get their trade truce back on track.
After two days of intensive talks in London, US and Chinese negotiators agreed on a framework on Wednesday to implement the accord reached in Geneva last month – and it involves easing their respective controls over critical materials and technologies vital to each other.
Li Chenggang, China's trade negotiator, said the agreement was reached "in principle," while US Commerce Secretary Howard Lutnick said both sides would now take the proposal back to their leaders for approval.
While specifics of the deal have not been released, Lutnick indicated that both had agreed to roll back export restrictions that are taking center stage in the trade war.
China's restrictions on exports of rare earth minerals and magnets to the US will be resolved as a "fundamental" part of the framework agreement, Lutnick told reporters in London, according to Reuters.
"Also, there were a number of measures the United States of America put on when those rare earths were not coming," he added. "You should expect those to come off, sort of as President Trump said: 'In a balanced way.'"
Frustrated by what it saw as Beijing's retreat from its pledge made in Geneva to ease rare earth exports, the US imposed a series of punitive measures – from limiting the sales of chip design software and ethane to China to threatening to revoke the US visas of Chinese students. Beijing has bristled at these moves and accused Washington of violating the Geneva consensus.
That fragile trade truce was looking increasingly precarious until US President Donald Trump held a long-awaited phone call with Chinese leader Xi Jinping last week to dial down tensions.
The latest round of talks, held at the ornate Lancaster House in central London, underscored the increasingly central role export controls have played in the trade war between the world's largest economies.
It also highlighted Beijing's powerful leverage from its dominance of the rare earth supply chain – and its growing readiness to wield it in pressing the US to ease export restrictions on China.
Rare earth minerals and their magnets are essential for everything from cars to fighter jets, and China holds a near-monopoly on these materials that are critical to American industries and defense.
Since early April, when Beijing imposed new licensing rules on certain minerals in response to Trump's tariffs, China's overseas shipments of rare earths have plunged, threatening industries globally, from electronics and defense to energy and carmaking.
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