USA and China at the negotiating table: trade dispute escalates again!

USA and China at the negotiating table: trade dispute escalates again!

On June 9, 2025, new talks between the USA and China will take place in London to defuse the ongoing trade conflict. High-ranking representatives of both countries take part in this important meeting. On the Chinese side, Vice Prime Minister He Lifeng will be present, while the US will be represented by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer. This round of negotiations, the first since the May trade agreement that included a temporary suspension of high tariffs, arose from a phone call between US President Donald Trump and Chinese leader Xi Jinping.

The key points of contention in the negotiations include US restrictions on technology exports to China and China's export controls on rare earths. These strategic raw materials are crucial to many industries and China owns over 90 percent of global production. Therefore, the country is often viewed as a monopolist in this area. China's new export controls require exporters to obtain permits for certain rare earths and outline which Western companies they want to supply to. These measures are a direct response to the punitive tariffs of up to 145 percent imposed by Trump.

Consequences of the trade negotiations

The trade conflict between the two world powers has already led to a US trade deficit with China of almost $300 billion. In 2024, the US exported $143 billion worth of goods to China, while imports from China reached $439 billion. With his tariffs, Trump's goal is to reduce this deficit through higher taxes and to strengthen domestic production. But business critics warn of the potentially negative impact of higher import fees on prices and economic growth.

China's new export controls could have significant consequences for global supply chains. Similar restrictions have been in place for other critical elements such as gallium and germanium since December. In the past it has been shown that China is prepared to use its export policy as an economic means of pressure; In 2010, an export ban on rare earths led to a dramatic increase in prices, particularly in Japan.

Trump has also announced or already implemented numerous new tariffs as part of his trade policy, including an additional 10 percent penalty on almost all imports. The legality of these measures is currently being examined in several proceedings, with Trump also considering ultimately taking the dispute to the Supreme Court. China's leadership is now calling for a reversal of US measures that are viewed as disadvantageous and an objective assessment of the progress in the negotiations.

The upcoming talks and the underlying issues are therefore important not only for immediate trading partners, but also for global economic stability, which could be affected by these tensions. The developments are being followed closely as they could potentially impact countries such as Germany and Japan.