US vows reprieve on some tech export restrictions as talks with China begin in London

Top economic officials from the United States and China kicked off a critical round of trade negotiations in London on Monday, with early signs of compromise from both sides.

According to a South China Morning Post report, citing a senior White House official, Washington is prepared to relax certain technology export restrictions on China, while also expressing confidence that Beijing will increase exports of rare earth minerals to the US market.

The talks are being led by China’s Vice Premier He Lifeng, alongside US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer, added the report, citing China’s state news agency Xinhua.

In an interview with American outlet CNBC, Kevin Hassett, Director of the National Economic Council at the White House, on Monday said that the US expectation was that “immediately after the handshake, any export controls from the US will be eased, and the rare earths will be released in volume, and then we can go back to negotiating smaller matters.”

A deal to ease restrictions on critical minerals and advanced technologies would mark a major shift in the ongoing US-China economic and tech rivalry.

In recent years, Washington has curbed China’s access to key innovations, like semiconductors and AI, over fears they could boost Beijing’s military capabilities.

When asked about the concerns over China using US technology for military advancement, Hassett added, “It depends, like the very, very high end Nvidia stuff is not what I’m talking about. I’m talking about possible export controls on other semiconductors, which are also very important to them”.

Since 2022, the US has restricted exports of Nvidia’s most advanced chips to China, leading the company to create lower-grade versions for the Chinese market.

Talks finalised after Trump-Xi call

The London talks were arranged following a call between President Xi Jinping and US President Donald Trump last week, where both leaders agreed to advance negotiations on trade disputes.

White House adviser Kevin Hassett said the two discussed “many topics”, including a deal to release “the magnets and rare earths that we need throughout the economy.”

“Some US companies that rely on those things, and there are enough of those, like, for example, auto companies … President Trump took it very seriously, called President Xi, and said, ‘we’ve got to, we’ve got to get the stuff coming out faster’. And President Xi agreed,” Hassett added.

Tensions escalate despite ’tariff truce’

Tensions between the US and China have escalated despite a recent “tariff truce” struck in Geneva last month, with both sides accusing each other of breaching the agreement.

Under the 90-day deal, both countries had pledged to sharply reduce tariffs. However, Washington has since banned advanced Chinese-made microchips and restricted exports of chip design tools and jet engine technologies to China.

Beijing, in turn, has kept tight controls on critical mineral exports imposed on April 4, despite promising to ease non-tariff measures in the Geneva accord. Its slow approvals for rare earth exports have raised alarms among US and European carmakers, who fear imminent factory shutdowns, reported SCMP.

The standoff underscores China’s powerful leverage in global supply chains, particularly through its dominance of rare earth magnets, which are essential to high-tech industries, according to research firm Gavekal Dragonomics.

“The question for the next round of talks is whether the US can offer China something it wants in exchange for relaxing its controls on rare earths,” the research note said.

“What China really wants is a lifting of export controls on semiconductor technology, where the US has the chokehold, but this would be politically difficult,” it added.

Beijing also wants to avoid another escalation in tariffs that would decimate its exports to the US market, but Trump might struggle to use that as leverage now that he has showed he is unwilling to maintain embargo-level tariffs, the note said.

On Saturday, China’s Commerce Ministry said it had approved several rare earth export applications and was open to deeper talks on export controls. Following a Trump-Xi call, China granted temporary export licences to suppliers for US automakers including GM, Ford, and Stellantis, Reuters reported.

The London meeting marks the first under a new trade dialogue mechanism established after last month’s Geneva accord. Vice-Premier He Lifeng is visiting the UK through Friday and met British finance minister Rachel Reeves on Sunday.

China’s May exports rose 4.8% year-on-year, but rare earth exports fell 48.3% to $18.7 billion. Shipments by weight declined 5.7%.

Meanwhile, the Trump administration faces legal challenges over its China tariffs. After a court deemed them illegal, a federal judge reinstated them temporarily. The administration is set to file its defense Monday, arguing the tariffs pressured China into talks.

With inputs from agencies