US and China Reach Tentative Trade Deal, A De-escalation in the Tech War?

In a significant development that could reshape the global tech landscape, the United States and China have agreed “in principle” on a framework to ease escalating trade tensions. Following two days of high-stakes negotiations in London, officials from both countries announced a tentative deal aimed at resolving disputes over critical exports, including rare earth minerals and advanced chips.

The agreement, which will be submitted to both President Biden and President Xi Jinping for final approval, builds upon previous discussions in Geneva and a recent phone call between the two leaders. While specific details remain undisclosed, US Commerce Secretary Howard Lutnick confirmed that the framework addresses export controls on goods and technologies vital to both nations’ industries.

A key element of the deal involves resolving the contentious issue of rare earth minerals. China’s near-monopoly on these essential materials, used in everything from smartphones to fighter jets, had become a major point of friction. Lutnick stated that easing China’s export restrictions on these minerals, and the subsequent removal of US countermeasures, is a fundamental part of the agreement. This follows recent US frustrations over perceived Chinese backtracking on previous commitments.

The negotiations, held at London’s historic Lancaster House, underscore the escalating importance of export controls in the ongoing US-China trade conflict. The recent imposition of US restrictions on chip design software sales to China and visa threats for Chinese students had further inflamed tensions. China, in turn, viewed these actions as violations of prior agreements.

This tentative agreement follows a May agreement to temporarily ease tariffs and marks a potential turning point in the trade war. While the road ahead remains uncertain pending final approval, the announcement suggests a willingness from both sides to de-escalate the conflict and find a path towards more stable economic relations.

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