LONDON — The United States and China have reached a preliminary trade agreement aimed at easing export restrictions and breathing new life into their fragile economic truce, officials from both nations confirmed Wednesday after two days of high-level negotiations in London.
U.S. Commerce Secretary Howard Lutnick described the outcome as “adding meat to the bones” of the stalled Geneva framework, which had faltered amid Beijing’s ongoing curbs on rare earth exports. Under the new arrangement, China has agreed to lift restrictions on exports of rare earth minerals and magnets—critical components for electric vehicles, renewable energy systems, and defense technologies.
In exchange, the U.S. has agreed to ease some of its own export controls on sensitive technologies, including semiconductor design software, aviation equipment, and other high-tech goods. Specific details of the rollbacks were not disclosed.
“We have reached a framework to implement the Geneva consensus and the commitments made in the recent call between the two presidents,” Lutnick said during a late-night press briefing. “If approved, we will proceed with implementation.”
China’s Vice Commerce Minister Li Chenggang confirmed the agreement in principle, stating that it would now be presented to leaders in both countries for final approval.
Trade Tensions and Economic Fallout
The diplomatic breakthrough comes amid heightened economic uncertainty. President Donald Trump’s unpredictable tariff policies and China’s retaliatory trade measures have rattled global markets and disrupted key supply chains. Earlier this week, the World Bank revised its global growth forecast for 2025 downward to 2.3%, citing prolonged trade tensions as a central factor.
Despite progress, officials and analysts caution that major divisions remain unresolved—particularly over U.S. tariffs and Beijing’s state-led industrial policies.
“This is not a final deal—it’s a restart,” said Josh Lipsky, senior director at the Atlantic Council’s GeoEconomics Center. “But returning to square one is still better than square zero.”
Tariff Deadlines Loom
The two nations now face a deadline of August 10 to finalize a broader agreement. Without a binding deal, tariffs are set to automatically increase:
- U.S. tariffs on Chinese imports could rise from the current 30% to as high as 145%.
- Chinese tariffs on American goods could jump from 10% to 125%.
The potential escalation underscores the urgency of the negotiations, which will continue in the coming weeks through diplomatic channels.
Strategic and Political Implications
The talks in London marked the most substantial engagement between the two powers in months. The outcome could influence not only the global economy but also political calculations in both Washington and Beijing.
For the Biden administration, stabilizing trade relations with China is a priority amid slowing domestic growth and mounting pressure from industry leaders. For China, easing export restrictions could help offset declining investor confidence and bolster a sluggish post-pandemic recovery.
While both governments described the agreement as a breakthrough, observers remain cautious.
“There’s movement, but not momentum—yet,” Lipsky said. “The real test will be in the implementation and whether both sides can bridge the deeper ideological divide.”
Looking Ahead
In the short term, the announcement may calm investor nerves and restore some predictability to U.S.–China trade relations. However, much hinges on whether this tentative step will lead to a durable resolution—or simply another temporary pause in an ongoing geopolitical standoff.
