Top U.S. and Chinese officials convened in London on Monday for a critical round of trade negotiations, aiming to salvage a crumbling truce as disputes over tariffs and rare earth exports threaten global supply chains.

The talks, led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, come amid legal uncertainty after a U.S. trade court deemed key tariffs illegal. Though paused in April, many tariffs remain in place pending appeal. This legal gray zone has weakened Washington’s leverage as it seeks broader market access in China and aims to secure Chinese investments in American manufacturing.

The Trump administration is also pushing to make some tariffs permanent to block a resurgence of Chinese manufactured exports. However, Chinese exports to the U.S. plunged 34% in May, their steepest drop since 2020, pressuring Beijing to seek compromise.

Rare Earths at the Heart of Negotiations

The trade conflict escalated further when China tightened export licensing for seven rare earth metals essential for high-tech and defense industries. These restrictions have severely disrupted supply chains, with factories across the U.S., Europe, and Japan running short on rare earth magnets used in vehicles, drones, and missiles.

White House economic adviser Kevin Hassett said on CBS’s “Face the Nation” that a primary objective of the talks is to “get shipments of rare earths from China to flow just as they did before the beginning of April.”

China, which controls up to 99.9% of global supply for these metals, has offered to ease exports to Europe—if the EU lifts new tariffs on Chinese electric vehicles and loosens high-tech export restrictions.

Visas, Export Controls, and Student Tensions

The standoff also includes Washington’s ban on technology exports to China and proposed visa revocations for Chinese students linked to the Communist Party or sensitive study areas. A phone call between Trump and Xi Jinping last week helped cool tensions, leading to softer rhetoric on student visas and rare earth controls.

Commerce Secretary Howard Lutnick’s addition to the U.S. delegation signals potential shifts in America’s stance on export controls, particularly regarding semiconductors and jet engine technologies.