The US and China have agreed on a preliminary framework aimed at salvaging their fragile trade truce, lifting export restrictions on critical minerals and averting a renewed tariff escalation, officials said following two days of talks in London. US Commerce Secretary Howard Lutnick said the deal builds on last month's Geneva agreement, which had stalled over China's curbs on rare earth exports. Under the new framework, Beijing would remove restrictions on rare earth minerals and magnets, while Washington would ease some of its recent export controls targeting semiconductor software and aviation goods. China's Vice Commerce Minister Li Chenggang confirmed the framework would be presented to the two countries' leaders. The deadline to finalise a broader deal is August 10. Without progress, punitive tariffs are set to surge, rising from 30 per cent to 145 per cent on US imports and from 10 per cent to 125 per cent on Chinese goods. Markets responded cautiously, with MSCI's Asia-Pacific index (excluding Japan) rising 0.57 per cent. Analysts stressed the importance of follow-through, particularly regarding export volumes of rare earths and the extent of US chip access to Chinese markets. The trade war, marked by shifting US tariffs and retaliatory curbs from Beijing, has disrupted global supply chains and prompted a 34.5 per cent drop in Chinese exports to the US in May, the steepest decline since the COVID-19 outbreak. China, which holds a dominant position in rare earth magnet production, began issuing new export licences to domestic firms following the talks. Despite the framework deal, longstanding issues persist, including US complaints about China's state-driven economic model. A US appeals court has meanwhile upheld Trump's sweeping tariffs while a legal challenge is under review, maintaining a critical pressure point on Beijing. Attribution: Reuters Subediting: Nada Ali
