US and Chinese officials convened at London’s Lancaster House for extended talks, aiming to swap US export-control rollbacks for a surge in Chinese rare-earth shipments. This marked the first high-level dialogue since the April Geneva meeting and stretched late into the evening.
Kevin Hassett, director of the White House Economic Council, indicated that Washington is prepared to lift recent curbs on chip-design software, jet-engine components, chemicals and nuclear materials “after the handshake,” while preserving export controls on Nvidia (NVDA) AI processors. The concession underscores US willingness to offer targeted relief in return for Beijing easing its rare-earth export restrictions.
Market Overview:- US offers to remove export controls on semiconductors, engine parts, chemicals and nuclear materials
- China expected to resume full rare-earth exports but keep high-end AI chips restricted
- Extended London talks follow Geneva agreement to pause tariffs for 90 days
- Negotiations held under tight security at Lancaster House with US team led by Bessent, Lutnick and Greer
- Chinese delegation headed by Vice Premier He Lifeng presses for clear licensing guidelines
- High-end Nvidia (NVDA) H2O AI chips remain off-limits under US concessions
- Investors watch US equity futures for signs of trade de-escalation
- Follow-up talks likely if licensing definitions remain unresolved
- Successful deal could stabilize AI supply chains and rare-earth markets
- US willingness to lift export controls on chip-design software, jet-engine components, chemicals, and nuclear materials signals a meaningful step toward trade de-escalation and targeted regulatory relief, bolstering business confidence[2][5].
- China’s expected resumption of full rare-earth exports would alleviate critical supply shortages for US industries such as automotive, defense, and clean energy, supporting manufacturing and economic stability[1][4].
- US stock futures have inched higher on the prospect of a deal, reflecting cautious optimism that a successful agreement could stabilize AI supply chains and rare-earth markets[2][5].
- Extended negotiations and high-level engagement at Lancaster House indicate both sides are committed to reaching a durable, enforceable framework that balances national security with commercial openness[1][5].
- If successful, this agreement could restore confidence in global supply chains, reduce market volatility, and set the stage for further trade cooperation between the world’s two largest economies[1][2].
- Follow-up talks are likely if critical licensing definitions remain unresolved, ensuring ongoing dialogue and the potential for incremental progress[5].
- Despite progress, high-end Nvidia AI chips remain off-limits, limiting China’s access to critical technology and potentially constraining global AI innovation and supply chain resilience[2][5].
- Markets remain cautious, as any agreement must be codified in precise, enforceable terms to restore confidence—vague or non-binding commitments may not address underlying supply chain vulnerabilities[5].
- Uncertainty persists over licensing guidelines and export definitions, raising the risk of future disputes or delays in implementation[5].
- China has signaled it will not fully relinquish its tight control over rare-earth exports, citing domestic industrial needs, which could limit the scope of any deal and leave key sectors exposed to future disruptions[5].
- Recent history of trade truces being overshadowed by renewed tensions and accusations of non-compliance suggests that even a successful deal may only temporarily ease US-China friction[1][5].
- If critical issues remain unresolved, follow-up talks could prolong uncertainty and delay the anticipated benefits of regulatory relief and rare-earth supply normalization[5].
US stock futures inched higher on the prospect of regulatory relief, though markets remain cautious that any agreement must be codified in precise, enforceable terms to restore confidence in global supply chains disrupted by abrupt policy shifts.
The outcome of these negotiations will set the tone for US-China trade relations in the coming months, determining whether preliminary agreements yield a durable framework that balances national security concerns with commercial openness.
