Crisis talks between the USA and China: Will trade peace return?

Crisis talks between the USA and China: Will trade peace return?

On June 7, 2025, China confirmed upcoming trade talks with the US to be held in London on Monday. These talks are the first visit under the China-US Economic and Trade Consultative Mechanism and are aimed at clarifying the finer points of a trade agreement reached in May. US President Donald Trump and Chinese President Xi Jinping had already had a telephone conversation on Thursday to intensify the dialogue.

On the US side, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer will take part in the talks. Trump said that China would resume deliveries of rare earths and magnets to the USA as part of the negotiations and described the negotiations as being well advanced. Nevertheless, its tariff policy has led to considerable uncertainty in world trade in the past.

Current sources of conflict

The trade dispute between the two nations, which has been going on since the beginning of 2018, is characterized by various points of contention. These include, among other things, US restrictions on the sale of technology products to China and China's export controls on rare earths. China's Ministry of Commerce justified these export controls with both civil and military purposes and announced that export licenses would be issued. These measures come in the context of a variety of allegations and counterclaims that both sides have made in recent weeks.

A few days ago, the Chinese government rejected allegations from Washington that it had violated customs agreements. China's Ministry of Commerce called these accusations "false accusations" and accused the US of imposing discriminatory measures. Specific US measures include restrictions on the sale of AI chips and chip design software to China and visa cancellations for Chinese students.

Economic impacts and forecasts

The trade measures and tariffs to date have had a significant impact on the economies of both countries, but also on global trade. Reports show that US exports to China fell 34% in 2018, pushing the US trade deficit to $621 billion. Trump's decision to increase tariffs on US imports from China from 20% to 34% in April 2025 also prompted worrying forecasts from US economists who fear negative impacts on the US economy.

In order to ease the current tensions, the USA and China reached an agreement in mid-May to suspend some tariffs for an initial period of 90 days. Chinese products, previously hit with tariffs of up to 145%, were now set to be cut to 30%, while US products were reduced to 10% from 125%. Despite this progress, the trade conflict remains tense and the bilateral talks in London could be crucial in determining how the relationship between the world's two largest economies develops.