BEIJING/SINGAPORE — The renewed US-China trade truce struck in London left a key area of export restrictions tied to national security untouched, an unresolved conflict that threatens a more comprehensive deal, two people briefed on detailed outcomes of the talks told Reuters.
Beijing has not committed to grant export clearance for some specialized rare-earth magnets that US military suppliers need for fighter jets and missile systems, the people said. The United States maintains export curbs on China’s purchases of advanced artificial intelligence chips out of concern that they also have military applications.
At talks in London last week, China’s negotiators appeared to link progress in lifting export controls on military-use rare earth magnets with the longstanding US curbs on exports of the most advanced AI chips to China. That marked a new twist in trade talks that began with opioid trafficking, tariff rates and China’s trade surplus, but have since shifted to focus on export controls.
In addition, US officials also signalled they are looking to extend existing tariffs on China for a further 90 days beyond the August 10 deadline agreed in Geneva last month, both sources said, suggesting a more permanent trade deal between the world’s two largest economies is unlikely before then.
The two people who spoke to Reuters about the London talks requested not to be named because both sides have tightly controlled disclosure. The White House, State Department and Department of Commerce did not immediately respond to requests for comment. China’s Foreign and Commerce ministries did not respond to faxed requests for comment.
President Donald Trump said on Wednesday the handshake deal reached in London between American and Chinese negotiators was a “great deal,” adding, “we have everything we need, and we’re going to do very well with it. And hopefully they are too.”
And US Treasury Secretary Scott Bessent said there would be no “quid pro quo” on easing curbs on exports of AI chips to China in exchange for access to rare earths. But China’s chokehold on the rare earth magnets needed for weapons systems remains a potential flashpoint.
China dominates global production of rare earths and holds a virtual monopoly on refining and processing.
A deal reached in Geneva last month to reduce bilateral tariffs from crushing triple-digit levels had faltered over Beijing’s restrictions on critical minerals exports that took shape in April.
That prompted the Trump administration to respond with export controls preventing shipments of semiconductor design software, jet engines for Chinese-made planes and other goods to China.
At the London talks, China promised to fast-track approval of rare-earth export applications from non-military US manufacturers out of the tens of thousands currently pending, one of the sources said. Those licenses will have a six-month term. Beijing also offered to set up a “green channel” for expediting license approvals from trusted US companies.
Initial signals were positive, with Chinese rare-earths magnet producer JL MAG Rare-Earth, saying on Wednesday it had obtained export licences that included the United States, while China’s Commerce Ministry confirmed it had approved some “compliant applications” for export licences.
But China has not budged on specialized rare earths, including samarium, which are needed for military applications and are outside the fast-track agreed in London, the two people said. Automakers and other manufacturers largely need other rare earth magnets, including dysprosium and terbium.
The rushed trade meeting in London followed a call last week between Trump and Chinese leader Xi Jinping. Trump said US tariffs would be set at 55 percent for China, while China had agreed to 10 percent from the United States.
