China and US negotiators huddled in London’s Lancaster House into the evening, extending talks aimed at swapping US tech export rollbacks for a surge in Chinese rare earth shipments, the first high-level dialogue since the April Geneva meeting.
Kevin Hassett, head of the White House Economic Council, signaled that while AI-grade Nvidia chips remain off-limits, the administration is prepared to lift curbs on a tranche of semiconductors, jet-engine parts, chemicals and nuclear materials “after the handshake,” offering Beijing a clear path to volume rare earth exports.
Market Overview:- US offers to remove export controls on chip design software, engine components and select materials
- China expected to resume full rare earth shipments but will keep high-end AI chips restricted
- Extended negotiations follow an initial 90-day tariff truce agreed in Geneva
- Talks held under tight security at Lancaster House, with US team led by Bessent, Lutnick and Greer
- Chinese delegation headed by Vice Premier He Lifeng seeks binding licensing terms
- Scope excludes Nvidia H2O chips but may include other AI and defense-relevant semiconductors
- Investors monitor US stock futures for signs of broader trade de-escalation
- Follow-up meetings possible if critical definitions of “export” and “licensing” remain unsettled
- Success could stabilize AI supply chains and ease rare earth shortages
- US willingness to lift export controls on a broad range of semiconductors, jet-engine parts, chemicals, and nuclear materials signals tangible progress toward trade de-escalation, reducing a key source of supply chain uncertainty.
- China’s expected resumption of full rare earth shipments could alleviate critical shortages for US manufacturers, supporting key industries and easing input cost pressures.
- Market reaction has been cautiously positive, with US equity futures rising on optimism that the Geneva tariff pause will translate into concrete regulatory relief and improved US-China relations.
- Success in these talks could stabilize AI and tech supply chains, boosting investor confidence and supporting growth in the tech sector.
- Extended negotiations and a focus on binding licensing terms suggest both sides are committed to reaching a durable agreement, reducing the risk of abrupt policy reversals.
- Follow-up meetings are possible if critical issues remain, indicating a sustained commitment to resolving trade disputes and avoiding escalation.
- Despite progress, high-end AI-grade Nvidia chips remain off-limits, limiting China’s access to critical technology and potentially constraining global AI innovation and supply chains.
- Uncertainty persists over the exact definitions of “export” and “licensing,” raising the risk of future disputes or delays in implementation of any agreement.
- The outcome may only paper over deeper strategic rifts, with underlying tensions over technology leadership and national security still unresolved.
- Markets remain cautious, as the modest lift in US equity futures suggests investors are not yet convinced that a broader rollback of tariffs or a lasting détente is imminent.
- If critical definitions remain unsettled, follow-up meetings could prolong uncertainty and delay the anticipated benefits of regulatory relief and rare earth supply normalization.
- Investors are watching to see if these talks catalyze broader tariff rollbacks or merely serve as a temporary fix, with the potential for renewed tensions if expectations are not met.
News of potential concessions lifted US equity futures modestly, reflecting cautious optimism that the two powers could translate Geneva’s tariff pause into concrete regulatory relief.
The outcome will set the tone for near-term US-China trade relations, with markets watching whether these talks catalyze a broader rollback of Trump administration tariffs or merely paper over deeper strategic rifts.
