US, China agree to ratchet down trade tensions

Negotiators have agreed a framework to get their trade truce back on track but haven’t divulged the details, which could lead to continued uncertainty.

US Commerce Secretary Howard Lutnick said the talks were going very well. Picture: Oliver Contreras/AFP

US and Chinese negotiators have wrapped up two days of intense talks in Geneva with what they said was a framework to get their trade truce back on track and ratchet down tensions between the two biggest economies.

Representatives from the countries said the framework would essentially restore a pact they agreed to in Switzerland last month, a deal that saw both sides lower tariffs and was premised in part on Beijing’s promise to speed critical mineral export licenses while both sides kept talking.

“The two largest economies in the world have reached a handshake for a framework. We’re going to start to implement that framework upon the approval of President Trump, and the Chinese will get their President Xi’s approval, and that’s the process,” Commerce Secretary Howard Lutnick said.

A senior Chinese negotiator, Li Chenggang, nodded to Lutnick’s remarks, saying the two sides “agreed in principle.”

The framework marked the latest twist in a winding trade war — one that had been ratcheting up in recent weeks following the earlier detente.

A key goal for the U.S. negotiators, led by Treasury Secretary Scott Bessent and Lutnick, was to get China to speed up exports of rare-earth minerals and magnets containing them as their Chinese counterparts had agreed to in Geneva last month.

The Chinese team, led by Vice Premier He Lifeng, a trusted aide to Xi Jinping, drove a hard bargain by asking the U.S. side to significantly loosen restrictions on the sale of technology and other products to China, according to people familiar with the matter.

The negotiators didn’t disclose exactly what they had agreed to as part of the framework, which could lead to continued uncertainty over the trade truce. And the lack of announced details may suggest the U.S. side will need Trump’s approval to undo some of the controls Beijing’s representatives asked for.

Following a phone call with Xi last week that paved the way for the London talks, Trump had said, “There should no longer be any questions respecting the complexity of rare-earth products.” Lutnick echoed that sentiment when talking to reporters in London.

“You should expect those to come off, sort of, as President Trump said, in a balanced way, when they approve” the rare-earth licenses, Lutnick said. “Then you should expect that our export implementation will come down,” he said.

Last month, Washington and Beijing agreed to reduce sky-high tariffs on imports in a de-escalation of trade hostilities. Both sides had since accused each other of violating the spirit of that agreement by using nontariff means to throttle exports.

The U.S. accused China of slow-walking export licenses for rare earths and magnets, critical components needed by U.S. companies for advanced machinery such as cars, semiconductors and military aircraft.

China bristled at new U.S. restrictions on exports to China of American technology including jet engines and chip-design software, as well as the Trump administration’s plan to revoke the visas of Chinese students studying at American colleges.

A recent commentary by the official Xinhua News Agency criticised the U.S. for allegedly viewing economic issues through the lens of security, saying, “This thinking will become the biggest obstacle” to co-operation between the two countries. Yet it also left the door open for relations to improve, saying strengthening economic ties will benefit both nations.

More follows

Dow Jones