London Round: US and China on Brink of Solving Rare Earth Crisis

On 9 June 2025, in London’s historic Lancaster House, a new round of trade talks between the United States and China began. The conflict flared after the Trump administration raised tariffs on Chinese imports by 10 % on 1 February 2025 and then to 20 % in March, provoking Beijing to impose retaliatory measures—including export restrictions on rare-earth minerals and specialty technological metals. 

The Geneva “truce” of 12 May halted any further tariff increases for ninety days, but questions of export-licensing for rare earth elements and their transit controls remain unresolved. The London round is intended to reaffirm the Geneva agreements and “build on their success” in order to stabilize global supply chains and reduce market tensions.

Key Provisions of the Communiqué Following Day One

Constructive Tone and a “Symbolic Handshake”

Negotiators characterized the discussions as “constructive” and “positive,” noting that talks were conducted in an atmosphere of mutual trust and readiness to compromise. According to Reuters, the White House sought a formal “handshake” between the heads of delegation to cement the Geneva commitments and to secure the easing of U.S. export restrictions on semiconductors after the London round. Simultaneously, The Guardian emphasizes that practical steps toward implementation were on the agenda from the very first day.

Rare-Earth Minerals and Export Restrictions

The central issue remains U.S. access to Chinese rare-earth elements and magnets—critical both for automakers and microchip manufacturers. Investors.com reports that the American side pressed for a clear timetable and criteria for issuing Chinese export licences for these resources. The communiqué notes the decision to establish a series of technical working groups, which over the coming weeks will draft a detailed plan for the issuance and oversight of such licences.

Specialized Monitoring Mechanisms and Schedule of Further Meetings

The communiqué records that tomorrow (10 June) talks will continue with an expanded roster from relevant departments (the U.S. Department of Commerce, the Chinese Ministry of Foreign Affairs, and representatives of industry ministries). While the precise details of the monitoring mechanisms remain confidential, it is noted that final decisions will be taken at ministerial level, with independent auditors from both sides to be involved.

To understand why technical working groups and closed-door monitoring protocols have become focal points of the London communiqué, let us return to the opening moves of escalation in this trade war.

Background to the Negotiations

In spring 2025, tariff‐wars between Washington and Beijing escalated: mutual duties on hundreds of billions of dollars’ worth of goods sparked heightened uncertainty in global markets.

• The May Truce in Geneva (12 May 2025)

A preliminary agreement was signed in Geneva to reduce reciprocal tariffs for ninety days and suspend new duties—providing a temporary reprieve for the trading partners and briefly boosting stock indices. See Reuters press release of 11 May 2025: US, China talks defuse trade row, resume in Geneva and Reuters report of 12 May 2025: US, China reach deal to slash tariffs, officials say.

Although the Geneva truce temporarily paused the tariff race, its scope did not cover several narrowly targeted disputes, which soon rose to prominence.

• Key Points of Contention

Beyond the rare-earth mineral dispute lay unresolved issues regarding export restrictions on advanced technology components (chip-design software, nuclear parts) and U.S. demands on pharmaceuticals and fentanyl control. See Reuters analysis of 6 June 2025: US, China hold trade talks June 9 in London, Trump says.

Trump–Xi Phone Call

Four days before the London round, on 5 June 2025, Presidents Trump and Xi Jinping held a more-than-hour-long telephone conversation—the first direct dialogue since Trump’s inauguration in January.

• Appeal to “Retreat from Negative Measures”

Beijing’s representatives urged Washington to abandon new tariffs and counter-measures, highlighting the negative impact of escalation on the world economy (see Hawaii News Now: US, China are holding trade talks in London after Trump–Xi phone call).

• Verbal Commitment on Rare-Earth Minerals

According to Reuters, Xi Jinping promised to “reconsider” export restrictions on rare-earth elements and magnets to the United States—a pledge that became a key topic for the London round: Key US-China trade talks set Monday in London.

Following this conversation, the public phase of preparations began at press briefings—which we now reflect in the following statements.

Statements by the Parties Ahead of the Talks

• Donald Trump (6 June 2025)

At a press briefing at New York’s airport, Trump responded “Yes, he did.” to a reporter’s question aboard Air Force One, confirming Xi Jinping’s agreement to resume shipments of rare-earth minerals and magnets to the U.S. (Reuters).

• Chinese MFA (7 June 2025)

MFA spokesperson He Lifeng announced that a “consultative dialogue mechanism” would operate at the London talks. “The first meeting of the China-U.S. economic and trade consultation mechanism will be held with the United States during this visit,” the Ministry of Foreign Affairs declared, underscoring its readiness for “mutually productive cooperation” (Reuters).

Implications for the European Market

Europe stands on the front lines of the London round’s repercussions— its outcome directly determining the viability of key industries and the confidence of financial investors:

• Critical Dependence of the Auto Industry

China controls up to 90 % of global production of rare-earth magnets required for electric motors—an average of 0.5 kg per vehicle (Reuters). Should restrictions persist, European plants risk suspension of output as early as mid-July.

• Stock-Market Reaction

The STOXX 600 index traded at 553.21 pts on 9 June, reflecting cautious optimism: investors are holding positions, awaiting specifics from London on the timing and volumes of rare-earth licence issuances (Reuters).

• Acceleration of EU Strategic Initiatives

In response to supply-chain vulnerability, the European Parliament has stepped up work on the “Critical Raw Materials Act,” envisioning large-scale expansion of processing capacities in Norway and North Africa and the creation of new logistics corridors in Latin America (Reuters).

And since everything boils down to how these agreements will be implemented in practice, let us look ahead to what awaits London-round participants tomorrow and beyond.

What’s Next?

• Continuation of Meetings (10 June 2025)

On day two, the parties plan to delve into technical details: agreeing precise timetables for export-licensing and mechanisms for monitoring compliance.

• Prospects and Risks

Even with a favorable outcome, final resolution of rare-earth supply, technological barriers, and reciprocal tariffs may take months. Meanwhile, the EU will monitor to ensure that any new agreements do not conflict with Single Market rules or undermine its own technological-security strategy.