LONDON — High-level trade negotiations between the United States and China are set to commence on Monday in London. This meeting aims to reinforce a fragile truce established last month amid ongoing tensions that have impacted the global economy.

A Chinese delegation, led by Vice Premier He Lifeng, will engage with U.S. officials, including Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent, and Trade Representative Jamieson Greer. The discussions are expected to last at least one day and follow a recent agreement reached in Geneva, which temporarily eased some of the trade hostilities between the two nations.

On May 12, the U.S. and China announced a 90-day suspension of most tariffs exceeding 100% that had been imposed on each other. However, the atmosphere has soured due to disputes over critical issues such as China’s control of rare earth minerals and access to advanced semiconductor technology from the U.S.

Experts predict that rare earths, essential for various industries including electronics and automotive, will be a focal point of the London talks. Robin Xing, chief China economist at Morgan Stanley, noted, "China’s control over rare earth supply has become a calibrated yet assertive tool for strategic influence. Its near-monopoly of the supply chain means rare earths will remain a significant bargaining chip in trade negotiations."

Tensions escalated after President Donald Trump accused China of blocking rare earth exports and announced additional restrictions on semiconductor exports. This has led to a backlash from Beijing, which views these actions as a breach of trade commitments.

The U.K. government is facilitating the venue and logistics for the talks but is not participating in the negotiations. A spokesperson stated, "We are a nation that champions free trade and have always been clear that a trade war is in nobody’s interests, so we welcome these talks."

In a sign of potential easing, a spokesperson for China’s Commerce Ministry indicated that the country had "approved a certain number of compliant applications" regarding export controls. Kevin Hassett, head of the National Economic Council, expressed optimism about restoring the flow of rare earth minerals, stating, "Those exports of critical minerals have been getting released at a rate that is higher than it was, but not as high as we believe we agreed to in Geneva."

The backdrop of these negotiations is a challenging economic landscape for China. Recent trade data revealed that China's overall exports rose by only 4.8% in May compared to the previous year, a significant drop from the 8.1% growth recorded in April. Exports to the U.S. plummeted by 34.5%, exacerbating concerns about the impact of the trade war on China's economy.

Additionally, deflationary pressures are evident, with the Consumer Price Index (CPI) dropping 0.1% year-on-year in May. The Producer Price Index (PPI) also saw a significant decline of 3.3%, marking the sharpest contraction in 22 months.

As the U.S. and China prepare for these crucial discussions, the world watches closely to see if a consensus can be reached on these fundamental issues.