US and China reach deal following intense London negotiations, with officials announcing a framework agreement to ease export curbs and preserve their trade truce. The breakthrough addresses market volatility and regulatory uncertainty that have been weighing on global investors right now. Commerce Secretary Howard Lutnick confirmed the deal tackles rare earth restrictions that were undermining the Geneva consensus reached last month.
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Navigating Export Curbs, Market Volatility, And Regulatory Uncertainty
Framework Agreement Details
Officials finalized the US & China reach deal during midnight talks at Lancaster House, and both sides are awaiting presidential approval at the time of writing. Commerce Secretary Howard Lutnick confirmed the agreement addresses export curbs that had threatened the trade truce between the two nations.
Lutnick stated:
“We have reached a framework to implement the Geneva consensus and the call between the two presidents. The idea is we’re going to go back and speak to President Trump and make sure he approves it. They’re going to go back and speak to President Xi and make sure he approves it, and if that is approved, we will then implement the framework.”
China’s Vice Commerce Minister Li Chenggang also confirmed that both sides had reached a trade framework during the negotiations.
Li Chenggang stated:
“The two sides have, in principle, reached a framework for implementing the consensus reached by the two heads of state during the phone call on June 5th and the consensus reached at the Geneva meeting.”
A rare phone call between Trump and Chinese President Xi Jinping last week gave the negotiations an extra boost, providing directives that officials later merged with the Geneva truce agreement.
Export Restrictions Resolution
The US & China reach deal specifically targets rare earth export curbs that had disrupted global supply chains and created regulatory uncertainty. China suspended its restrictions on critical minerals exports in April, prompting the US to respond with its own export curbs on semiconductor software, chemicals, and other technology goods.
Lutnick said:
“Also, there were a number of measures the United States of America put on when those rare earths were not coming. You should expect those to come off, sort of as President Trump said, in a balanced way.”
This balanced approach aims to preserve the trade truce while addressing the regulatory uncertainty around critical supply chains that has been affecting businesses worldwide.
Market Impact and Timeline
Markets showed cautious optimism following news that the US & China reach deal, with Asia-Pacific shares rising 0.2% right now. However, market volatility continues as both sides face an August 10 deadline for comprehensive negotiations to finalize their trade truce.
The World Bank cut global growth forecasts to 2.3% this week, citing higher tariffs and trade tensions as headwinds. Chinese exports to the US dropped 34.5% in May, highlighting the stakes involved in preserving the trade truce and reducing export curbs.
Chris Weston from Pepperstone stated:
“The devil will be in the details, but the lack of reaction suggests this outcome was fully expected.”
Josh Lipsky from the Atlantic Council’s GeoEconomics Centre said:
“They are back to square one but that’s much better than square zero.”
If negotiations fail by August, tariff rates will snap back dramatically – from about 30% to 145% on the US side and from 10% to 125% on China’s side. This regulatory uncertainty continues to weigh on investor sentiment despite the framework agreement that officials reached.
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The deal represents progress in managing export curbs and market volatility, though significant challenges remain ahead for both nations as they work to maintain their trade truce.
