US, China to hold trade talks in London

US, China to hold trade talks in London

Tech in Asia·2025-06-09 17:02

Top officials from the United States and China will meet in London on June 9, 2025 to discuss ongoing trade disputes, including critical export controls.

This meeting follows a preliminary agreement reached in Geneva last month aimed at easing tensions between the two countries.

The US delegation will be led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer.

China’s delegation will be headed by Vice Premier He Lifeng.

This meeting occurs shortly after a phone call between US President Donald Trump and Chinese President Xi Jinping, where trade issues and other bilateral concerns were addressed.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ U.S.-China trade relations follow a 240-year pattern of cooperation and conflict

The current trade tensions continue a historical cycle dating back to 1784, when the American ship “Empress of China” established the first commercial contact by bringing ginseng, lead, and animal skins to Canton in exchange for tea and silk 1.

Similar to today’s talks, the Treaty of Wanghia in 1844, America’s first formal trade agreement with China, came after periods of tension, granting U.S. merchants expanded trading rights and most-favored-nation status 2.

Trade relations have repeatedly faced disruptions throughout history, most notably between 1950-1972 during the Korean War and early Cold War period, before eventually resuming as economic interests prevailed 1.

This historical context shows how current negotiations in London represent the latest chapter in a relationship characterized by periods of economic interdependence interrupted by geopolitical tensions.

2️⃣ Rare earth elements represent a strategic leverage point beyond tariffs

China’s April 2025 export restrictions on seven rare earth elements significantly escalated the trade dispute by targeting materials critical to U.S. defense, energy, and automotive sectors 3.

The U.S. remains particularly vulnerable in this area, relying on China for 99% of its heavy rare earth processing with few immediate alternatives available for elements essential to technologies like F-35 fighter jets 3.

Despite investing over $439 million to develop domestic rare earth supply chains, U.S. production capabilities remain insufficient to meet defense needs, highlighting the strategic nature of this specific trade restriction 3.

This explains why Trump’s announcement about resumed rare earth shipments following his call with Xi was significant, as it addresses a critical supply chain vulnerability that extends beyond traditional tariff concerns.

3️⃣ Economic interdependence complicates “decoupling” efforts

Despite escalating tensions, bilateral trade between the U.S. and China exceeds $650 billion annually, with each country serving as a crucial export market for the other 4.

The intertwined nature of the economies is reflected in market reactions, with the S&P 500 recovering most of its losses following the Geneva truce, demonstrating how trade stability directly impacts global economic sentiment 5.

Businesses have begun diversifying supply chains away from China toward alternatives like Mexico and Vietnam, but complete decoupling faces significant challenges due to established manufacturing infrastructure 6.

This economic reality explains why both sides continue negotiations despite rhetoric about decoupling, as the costs of complete economic separation would be substantial for both countries and the global economy.

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