The United States and China resumed high-level trade talks in London on June 10, marking the second day of crucial discussions aimed at stabilizing an increasingly fragile economic relationship. The negotiations, which follow the 90-day truce brokered in Geneva earlier this year, are centered around major sticking points such as tariff reductions, export controls on advanced technologies, and rare-earth mineral supplies.

U.S. Commerce Secretary Howard Lutnick noted that the talks were progressing positively and may extend into a third day if required. His remarks reflected a tone of cautious optimism from Washington. Representing Beijing at the table are Vice Premier He Lifeng and Vice Commerce Minister Li Chenggang, signaling China’s strong intent to reach a workable agreement.

Sources close to the discussions revealed that a draft framework is being finalized. Under this preliminary deal, China is expected to resume its rare-earth exports to the United States, a move critical to the American tech and defense sectors. In exchange, the U.S. may relax specific export restrictions, particularly those impacting semiconductor components. However, both sides are expected to retain a portion of the tariffs already imposed: U.S. tariffs will remain at approximately 55%, while China is likely to uphold a 10% duty on American goods.

Financial markets have responded to the dialogue with modest gains, reflecting investor hope for a diplomatic breakthrough. Chinese equities and Asian markets showed minor upticks, though traders remain cautious due to the absence of detailed timelines and concrete enforcement mechanisms within the proposed deal.

Despite progress, analysts warn that the framework falls short of resolving broader tensions. Longstanding issues such as intellectual property rights, trade imbalances, and structural concerns remain largely unaddressed. The current deal is more of a strategic pause than a lasting resolution, aimed at preserving the Geneva truce, which is set to expire in about 60 days.

President Donald Trump and Chinese President Xi Jinping are expected to review the proposed framework before any final decisions are made. Their approval will be essential to translating diplomatic momentum into legally binding agreements.

In summary, while the London negotiations may have opened the door for cooperation, the real test lies ahead: transforming a framework of goodwill into enforceable commitments that can withstand political and economic pressure on both sides of the Pacific.