Background and Relevance of Key Figures
The European Union (EU) is aiming for a “firm handshake” agreement with China regarding rare earths in ongoing trade negotiations. Representatives from the United States and China will meet on Monday in London to further outline the future trade mechanism they agreed upon last month in Geneva. Kevin Hassett, the economic advisor to the White House, expressed confidence that a brief but firm meeting will result in an agreement on rare earths trade.
The United States holds significant interest in this matter, as China controls approximately 90% of these critical components. Any slowdown in supply could disrupt the production of some U.S. companies that rely on them. In a phone conversation last week, President Donald Trump conveyed his desire to meet with Chinese President Xi Jinping to finalize a rare earths agreement.
Key Negotiators and Meeting Participants
The U.S. delegation for the London meeting will be led by Secretary of the Treasury Scott Besson, Secretary of Commerce Howard Lutnick, and U.S. Trade Representative Jamieson Greer. China will be represented by Vice Premier He Lifeng, who previously attended a meeting between the two nations in Switzerland.
Trade Disputes and Recent Developments
Rare earths are essential materials for manufacturing various products, including electric vehicles. The trade dispute between the U.S. and China has intensified due to new U.S. restrictions on advanced technologies, which led to countermeasures from China.
On May 12, following discussions between representatives of both governments in Switzerland, the U.S. and China announced a 90-day suspension of substantial tariffs imposed on each other’s imports. The U.S. halved its 30% tariff rate on Chinese imports to 15%, while China reduced its 125% tariff on U.S. imports to 10%.
Expected Outcomes
Hassett indicated that immediately following the handshake, the U.S. would lift all export controls on rare earths, releasing them in large quantities. Subsequent negotiations could then focus on minor issues.
Key Questions and Answers
- What are rare earths? Rare earths are a group of 17 chemical elements characterized by their high magnetic and luminescent properties. They are crucial for manufacturing various products, including smartphones, electric vehicles, wind turbines, and military equipment.
- Why is the U.S.-China trade dispute significant? The disagreement over rare earths and advanced technologies has strained U.S.-China trade relations, potentially affecting global supply chains and industries reliant on these materials.
- Who are the key negotiators in this meeting? The U.S. delegation includes Secretary of the Treasury Scott Besson, Secretary of Commerce Howard Lutnick, and U.S. Trade Representative Jamieson Greer. China will be represented by Vice Premier He Lifeng.
- What tariff changes were agreed upon in May? The U.S. reduced its 30% tariff on Chinese imports to 15%, while China lowered its 125% tariff on U.S. imports to 10%. This suspension is part of a 90-day agreement to facilitate further negotiations.
