USA and China: trade talks on the brink - what happens now?

USA and China: trade talks on the brink - what happens now?

London, Großbritannien - The trade talks between the USA and China that started on Monday in London continued on Tuesday. These discussions, which were originally only scheduled for one day, indicate that both sides are interested in a solution to the existing trade problems. US Finance Minister Scott Bessent describes the negotiations as productive, although no specific details about the course or the content have been announced. Bessent will fly back to Washington due to an appointment before the US Congress, which indicates how serious the situation is, not only for the negotiating partners, but also for political developments in the USA.

The complete discussions last almost seven hours, which goes beyond the original expectations. In the meantime, the Chinese side did not comment on the course or details of the conversation. The focus is particularly on topics such as export controls and trade with rare earths that are of central importance for many industries and countries. It is known that many countries are strongly dependent on China, and this dependency could endanger the global supply chains.

background of the trade talks

The trade war between the two nations has noticeable effects on the global economy since Donald Trump took office. High special tariffs were introduced to various trading partners, but in particular on China, which leads to nervousness on stock exchanges and a decline in economic prospects. In this context, the urgency of the conversations is evident. On April 2, 2025, Trump introduced extensive tariffs, whereupon China reacted with similar measures. Mutual tariffs of over 100 percent make trade unaffordable for many companies.

Frustration over the tariff is not only reflected in the relationship between the USA and China, but also affects the entire international trading system. According to [Coface] (https://www.coface.de/news-wirtschaftsstudien-insights/handelskrieg- and-china-taxed-in-unkahn-gewaesser), the risk of recession could increase significantly for the US and global economy if the tensions are not broken down. The United States has noticed an increase in the trade deficit since April and threatens in the event of a break -in of imports with price increases and a disappearance of certain products from the market.

effects on the European economy

In addition, there are also worrying developments in the European economy, as the Association of European Auto suppliers reports. Due to the trading situation, several production facilities could have to be closed. Hundreds of companies have made export applications since the beginning of April 2025, with only a quarter of these applications have been approved. This situation could tighten in the coming weeks as soon as the inventory runs out.

China has made suggestions to improve trade with the European Union and has given the prospect of an accelerated procedure for approval of suitable applications, which still has to lead to realistic results. The concerns of the EU, especially rare earths and other critical traders, are taken seriously, as the Chinese Ministry of Commerce emphasizes.

In the general location, a clear need for dialogue and sustainable solutions between the trading powers to stabilize the global economy and avoid potential crises.