U.S. and China Agree to Lift Rare Earth Export Restrictions, Tariff Disputes Persist

The United States and China have reached a framework agreement that includes lifting restrictions on rare earth exports. However, structural conflicts between the two countries remain unresolved.

According to Reuters on the 10th (local time), during two days of high-level U.S.-China negotiations in London, U.S. Secretary of Commerce Howard Lutnick stated, "This agreement builds on the discussions and agreements made between our two leaders in Geneva last month."

The agreement includes partially lifting export controls on U.S. semiconductor design software, aircraft, and other key items, while China will remove its restrictions on rare earths and magnetic exports. Li Chenggang, China's Vice Minister of Commerce, also confirmed these points. He said, "In principle, we have reached a trade agreement framework to report to our two leaders."

However, no resolution was reached on structural conflicts such as tariffs and industrial subsidies. Josh Lipsky, Senior Director at the Atlantic Council, commented, "Both sides are essentially back to square one," adding, "But even this is a positive step forward." If the two countries fail to reach a comprehensive trade deal by August 10, tariffs could increase again to 145% and 125%, respectively.

Secretary Lutnick said, "China's restrictions on rare earth exports are a fundamental issue that needs to be settled within the framework agreement," and, "The United States will also be lifting the measures it imposed in response, in a balanced way." In May, the United States revoked export licenses for semiconductor design software, chemical products, and aeronautical equipment to China in response to China's suspension of rare earth exports.