US and China agree to a trade truce, but Beijing seems to be gaining the upper hand

The US and China said they have agreed in principle to a framework for dialling down trade tensions between the world’s two biggest economies. After a meeting in London, the second time in a couple of months that two sides have met since US President Trump's sweeping tariff onslaught on its trading partners, there were indications of a reconciliation.

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What is beginning to get clearer, though, after the second meeting, is that this is perhaps not how America imagined the trade war to unfold. China is beginning to dictate the direction of these bilateral talks, with the US almost seen as requesting for much-needed concessions on the resumption of supplies of critical inputs.

In the first round of talks in Geneva, the US delegation led by Treasury Secretary Scott Bessent had asked the Chinese to cut its tariffs in tandem with theirs, primarily because the Americans were facing the heat back home from the early fallout of the high tariffs, including empty shelves at US grocery stories and surging prices of daily use commodities. Now, in London, the American side has asked the Chinese to “suspend or remove” restrictions on rare earths magnets, which has forced a supply-chain crunch that is visible in sectors such as auto manufacturing and electronics assembly. The London meeting follows a call between Trump and Chinese President Xi Jinping on June 5, which was initiated by the White House.After the London talks, US Commerce Secretary Howard Lutnick said the deal should result in restrictions on rare earth minerals and magnets “being resolved”. Both sides said they would now take the plan to their country’s presidents for approval.