The second round of high-stakes tariff negotiations between the United States and China is underway at Lancaster House, a historic government venue in the U.K. capital. As the world watches, the talks are being closely scrutinized for signs of progress in easing tensions between the globe’s two largest economies and averting a deeper trade conflict.
Talks extended into a second day on Tuesday, with a high-powered U.S. delegation on the ground. Commerce Secretary Howard Lutnick, Trade Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer are representing Washington, while China’s Vice Premier and chief economic envoy He Lifeng is leading Beijing’s delegation.
President Donald Trump offered an upbeat assessment on Monday:
“We’re doing well with China. China’s not easy,” he told reporters at the White House. “We’re getting good reports from the talks.”
The last meeting between the two sides took place in Geneva in May, where they agreed to a 90-day pause on the more than 100% base tariffs each country had imposed during the height of the trade war. Some of those Trump-era tariffs remain in place. Under the current framework, U.S. tariffs on Chinese goods have been reduced to 30%, while China has lowered its own to 10%.
Among the most contentious issues are Chinese exports of rare earth minerals—critical to sectors like automotive and defense—and China’s access to advanced U.S. technologies, such as semiconductor chips.
During negotiations, the U.S. is also pressing China to increase purchases of American products and reduce the bilateral trade imbalance, a key condition of the “Phase One” trade deal from Trump’s first term, which China never fully implemented.
Despite the Geneva truce, relations have worsened. Each side accuses the other of backsliding on agreed commitments. China has further restricted exports of rare earths—where it holds a near-monopoly—prompting concern across the West. Customs data shows Chinese rare earth exports by value have declined over 20% year-over-year.
Last week, Trump claimed progress on that front:
President Trump said that Xi Jinping had agreed to restart rare earth exports to the U.S. Analysts say this issue may see forward movement during this week’s discussions.
Beijing, however, is signaling caution. While it’s expressed willingness to create an expedited “green channel” for rare earth shipments to key industries, it has also emphasized the strategic value of those materials.
According to a state media commentary, China’s export policies are “driven by its domestic industrial sustainable development needs.”
Meanwhile, tensions have intensified after Washington imposed new export controls targeting high-end chip technologies and design software, alongside planned visa revocations for some Chinese students studying in the U.S.
“We should not hold our breath for any major progress,” warned Yu Jie, senior China expert at Chatham House in London. “We’re now into deep water of trade negotiations between Beijing and Washington. China is aware of the importance of holding this card of the rare earth export controls. On the other hand, the U.S. really wants to slow down China’s technology progress.”
Still, negotiators remain engaged.
“The talks are going well,” Lutnick said Tuesday. “We’re spending lots of time together.” He noted that discussions may extend beyond Tuesday, with the Chinese team expected to stay in London throughout the week.
In a separate bilateral meeting, China’s Commerce Minister Wang Wentao met with U.K. Business Secretary Jonathan Reynolds. According to China’s Commerce Ministry, Wang emphasized the importance of upholding the multilateral trading system and called for deeper cooperation with Britain on finance and sustainability.
The British government clarified it is not directly involved in the U.S.-China negotiations, though it is providing logistical support.
“We are a nation that champions free trade and have always been clear that a trade war is in nobody’s interests, so we welcome these talks,” the U.K. government said in a statement.
The U.K. is also in the midst of finalizing a separate trade agreement with the U.S., which the two countries reached last month.
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