It’s a big moment in London right now. On June 9, 2025, top officials from the U.S. and China are sitting down at Lancaster House, trying to cool off a trade war that’s been rattling markets and messing with global supply chains. The talks, now in their second day, are a follow-up to a shaky truce hashed out in Geneva last month.Both sides are flashing some cautious hope, but let’s be real—there’s a mountain of issues, like rare earth minerals and tech transfers, making a lasting deal feel like a long shot.

How We Got Here: A Trade War Rollercoaster

The U.S. and China have been going at it for a while now. Back in April, President Donald Trump slapped tariffs as high as 145% on Chinese goods, pointing fingers at China’s state-run economy and its role in the fentanyl crisis. China hit back hard with 125% tariffs on U.S. products and tightened the screws on rare earth minerals—those obscure but super-important materials used in everything from electric car batteries to iPhones. That move sent shockwaves through U.S. factories, with automakers like Ford and GM hitting pause on production because they couldn’t get the magnets they needed.

A glimmer of hope came in Geneva last month when both sides agreed to a 90-day tariff timeout, dropping duties to a baseline 10%. But the good vibes didn’t last. China accused the U.S. of breaking the deal with new restrictions on semiconductors and jet engine tech, while the U.S. grumbled that China was dragging its feet on sending rare earths again. A 90-minute call between Trump and Chinese President Xi Jinping last week set the stage for London, with Trump calling it a “great talk” and saying Xi promised to get rare earth shipments moving.

What’s Happening in London: The Big Players and Goals

The U.S. team, led by Treasury Secretary Scott Bessent, includes Commerce Secretary Howard Lutnick and Trade Rep Jamieson Greer. China’s side is headed by Vice Premier He Lifeng, with Commerce Minister Wang Wentao and trade negotiator Li Chenggang in tow. Lutnick’s presence is a big deal—he’s the guy handling U.S. export controls, so you know rare earths and tech are front and center.

Here’s what they’re hashing out:

• Rare Earths Are a Big Deal: China controls about 90% of the world’s rare earth supply, so when they slam the brakes on exports, it’s a gut punch to U.S. manufacturers. The U.S. is pushing hard for China to loosen up, with folks like Kevin Hassett from the National Economic Council saying it’s critical to keep factories running.
• Tariffs on the Table: Both sides want to lock in lower tariffs for good. China’s looking for a stable trade environment, while the U.S. is pushing for more access to Chinese markets and bigger orders for American stuff like crops and energy.
• Tech Tensions: The U.S. wants China to ease up on rare earths in exchange for fewer restrictions on things like advanced chips. China, meanwhile, sees those U.S. tech controls as a slap in the face after Geneva.

Monday’s talks went on for six hours, and the mood was cautiously upbeat. Bessent called it a “good meeting,” and Lutnick said things were “moving in the right direction.” China’s team, led by He Lifeng, stayed quiet, which is pretty typical for Beijing—they’re not big on public chatter during these things. The talks picked back up Tuesday morning at 10 a.m. local time, with whispers of a possible “handshake” deal on rare earth exports.

Why This Matters: Markets and Beyond

Wall Street’s keeping a close eye on this. The S&P 500 is riding high, close to its February peak of 6,144, partly because investors are hopeful these talks will keep things steady. Stock futures ticked up when the London meetings were announced. But don’t get too excited—experts like Ian Bremmer from the Eurasia Group say a big, game-changing deal is a long shot. The U.S. and China are still drifting apart, and there’s no shortage of tough talk in Washington.

China’s feeling the heat too. Their exports to the U.S. tanked 21% in April to $33 billion, and Nomura’s warning that the trade war could wipe out 16 million jobs in China. Over here, the National Retail Federation says U.S. imports from China could drop 75-80% in the second half of 2025, which could ding the economy enough to cause a rare GDP contraction—the first since early 2022.

The ripple effects are huge. U.S. automakers are struggling without those rare earth magnets, but there’s some good news—Boeing just restarted plane deliveries to China on June 9, which might be a sign things are thawing.

The Tough Road Ahead

Let’s not kid ourselves—there’s a lot of bad blood here. China’s commerce ministry has called out the U.S. for new restrictions, saying they’re not playing fair after Geneva. Trump’s been blunt, calling Xi “tough to deal with.” Plus, there’s a legal mess—the U.S. tariffs were ruled unlawful by a trade court in May, and the administration’s got a deadline to defend them in court.

Analysts like Eswar Prasad, who used to run the IMF’s China division, say these talks are a step forward, but a long-term fix is a tall order. Both sides are juggling national security and economic priorities, and neither wants to look like they’re backing down. China’s got the upper hand with rare earths, while the U.S. holds the cards on tech.

These London talks are a make-or-break moment for U.S.-China trade. They could steady the ship—or make things even rockier. Businesses, investors, and everyday folks relying on affordable goods are all watching, knowing the outcome could shape the global economy for years to come.

Sources: Reuters, The New York Times, Bloomberg, CNN, Yahoo Finance