(Bloomberg) -- Trade talks between the US and China kicked off in London, with the US signaling a willingness to remove restrictions on some tech exports in exchange for assurances that China is easing limits on rare earth shipments.
The meeting, which began Monday just after 1 p.m. local time, is expected to extend into the UK evening and may restart Tuesday if necessary.
The Trump administration expects that “after the handshake” in London, “any export controls from the US will be eased and the rare earths will be released in volume” by China, Kevin Hassett, head of the White House’s National Economic Council, told CNBC.
Hassett’s comments from Washington were the clearest signal yet that the US is willing to offer such a concession, though he added that the US would stop short of including the most sophisticated US chips made by Nvidia Corp. used to power artificial intelligence.
“The very, very high-end Nvidia stuff is not what I’m talking about,” Hassett said, adding that restrictions would not be lifted on the Nvidia H2O chips that are used to train AI services. “I’m talking about possible export controls on other semiconductors which are also very important to them.”
US stocks flipped between small gains and losses, and Chinese shares trading in Hong Kong entered a bull market, as some investors expressed hope the talks signaled a cooling of trade tensions.
The first round of negotiations since the teams met a month ago is aimed at restoring confidence that both are living up to commitments made in Geneva. During those discussions, Washington and Beijing agreed to lower crippling tariffs for 90 days to allow time to hammer out ways to address a trade imbalance that the Trump administration blames on an unfair playing field.
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The confusion after the Geneva meeting about China’s rare earth export-permitting process, combined with US limits on tech shipments and Washington’s recent crackdown on Chinese student visas, underscore the complexity of deal-making between China and the US.
“They left too many things open to interpretation,” said Josh Lipsky, chair of international economics at the Atlantic Council. The US and China “just want to get back to where they were in Switzerland with a few more agreements down on paper to actually understand what is gonna be licensed, what gets permitted, what doesn’t,” he added.
A phone call last week between President Donald Trump and his counterpart Xi Jinping appeared to give fresh momentum to reviving talks and reaching a deal.
Delegates Arrive
On Monday at London’s Lancaster House — where former European Central Bank President Mario Draghi delivered his “whatever it takes” speech in 2012 — US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer will meet a Chinese delegation led by Vice Premier He Lifeng.
The addition of Lutnick, who’s in charge of curbs on the sale of advanced technology, signals Trump may be willing to consider reversing some of the restrictions that threaten to hobble China’s long-term growth ambitions, ranging from tech supplies to jet engine parts.
US-China trade tensions escalated this year as Trump hiked duties on Chinese goods, prompting retaliation from Beijing. That’s led to pain in both economies, including distortions in data and uncertainties for businesses trying to navigate sudden changes in trade policy.
Earlier on Monday, Chinese government figures showed exports rose less than expected last month as the worst drop in shipments to the US in more than five years counteracted strong demand from other markets.
In the US, job growth moderated in May and the prior months were revised lower, indicating employers are cautious about growth prospects. Trump’s tariffs are causing uncertainty and delays for US manufacturers, particularly in the Midwest, which is affecting their investment and production plans.
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--With assistance from Annmarie Hordern, Kasia Klimasinska and Hadriana Lowenkron.
(Adds markets, Hassett comments in fourth to sixth paragraphs)