Trade discussions between the United States and China, held last week in London, revealed new tensions between the two powers as negotiators failed to bridge differences over sensitive strategic exports and trade tariffs.
Two sources familiar with the discussions told Reuters that China refused to grant permission for the export of rare earth magnets, which are essential for American military systems, including fighter jets and missiles.
AI Chip Restrictions and Tariff Extensions
Concurrently, the U.S. gave no indication of easing restrictions on the export of advanced artificial intelligence chips to China, citing their potential military use. Chinese negotiators seemingly linked progress on the rare earth issue to the removal of American controls on AI chips, creating a new deadlock in talks that had initially focused on issues such as opioid trafficking, tariffs, and China’s trade surplus.
Furthermore, American officials signaled that they are considering extending existing tariffs on China for 90 days beyond the August 10 deadline agreed upon last month in Geneva. This suggests that a more stable trade agreement between the world’s two largest economies is not expected to be reached before the end of summer.
