U.S. Commerce Secretary Howard Lutnick announced on Tuesday that a significant friction point in the U.S.-China relationship has been addressed. This announcement comes just weeks after high-level discussions in London between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. Those conversations culminated in the consensus agreement on a new national trade framework. This framework appears to prioritize addressing tensions—welcome news indeed on the highly consequential and contentious topic of China’s export controls on rare earth minerals and magnets.
Rare-earth minerals and magnets are critical inputs for high-tech manufacturing. They are so crucial that their access is key for industries ranging from autos to aerospace. Lutnick stressed that removing these restrictions is a big step in the right direction in U.S.-China relations. He said those U.S. export controls would be removed “in an equitable manner.” This step would hopefully deepen cooperation between the two countries.
The London discussions were an extension of the process to keep a truce while simmering trade skirmishes were actively disputed. Both delegations engaged in frank discussions. This transparency allowed them to address the difficult, oftentimes thorny, issues of their still present trade war that continues to be a key irritant in U.S.-China relations. Nevertheless, uncertainty with tariffs still hangs in the air, though most companies on either side of the border following these developments remain warily optimistic about the eventual result.
Lutnick’s comments, made on Monday at the broker’s earnings call, show how pervasive the desire to settle trade disputes peacefully is becoming. Rare-earth minerals are central to producing nearly every advanced technology from smartphones to renewable energy technologies. Put another way, this makes a compelling case for robust cooperative economic ties.
And yet, even though the framework agreed to in London shows significant progress, it is not enough to close the gap on what lies ahead. The U.S. and China still have to wade through a slew of complex trade policies and regulations before coming to a final resolution. To that end both sides have made a determined commitment to partner and engage. This willingness to compromise on all sides opens up prospects for substantive negotiations.