End in sight for US-China trade war with ‘framework’ announced in London
The US and China have agreed on a “framework” by which to implement a trade truce after two days of “marathon negotiations” in London.
Details from the framework agreed on Tuesday have yet to be released, but US Commerce Secretary Howard Lutnik said it put “meat on the bones” of the Geneva deal, which lowered tariffs from the highs of Trump’s initial salvo.
The initial truce was struck after talks in Geneva in May but was impeded by two spanners: the US accusing China of “a critical violation” around an agreement around rare earth mineral and magnet exports, and the Chinese denouncing new US export controls.
‘Rare earth’ products are used in the car, electronics, and defence industries.
In Geneva, a “total reset” of US-Chinese relations, as President Donald Trump framed it, saw negotiators agree to slash tariffs by 115 percentage points, and set a 90-day truce allowing for the formalities to be ironed out.
Extra levies imposed on China by the US in 2025 would drop to 30 per cent, while Chinese tariffs would fall to 10 per cent.
Where things went awry
In April, Trump sprayed the world with “reciprocal” tariffs. The US has its largest trade in goods deficit with China, worth $295bn in 2024. The Chinese government had, at the time, imposed a 13 per cent VAT and 40 per cent in other duties on American goods.
Despite a temporary consensus being reached, Chinese exports to the US still dropped by 34.5 per cent.
The mounting trade war had seen tariffs reach 125 per cent on each side, which experts said could constitute an embargo, in effect.
After the obstruction of the implementation of the agreement reached in Geneva Trump limited tech sales to China, threatened to revoke Chinese students’ US visas, banned the sale of US software used to design semiconductors to China, amongst other measures.
China said this violated the Geneva consensus.
Tuesday’s framework resolved these new disputes.
“We have reached a framework to implement the Geneva consensus and the call between the two presidents,” Lutnick said.
“The idea is we’re going to go back and speak to President Trump and make sure he approves it. They’re going to go back and speak to President Xi and make sure he approves it, and if that is approved, we will then implement the framework,” the commerce secretary added.
Talks took place on neutral turf – Lancaster House in the heart of London’s political district. They were led by the Treasury secretary, Scott Bessent, alongside the US commerce secretary, Howard Lutnick, and the trade representative, Jamieson Greer.