US-China trade talks scheduled to begin in London on Monday encounter fresh challenges as new disputes threaten the fragile truce agreed last month. The two countries had paused most of their tariffs for 90 days, aiming to ease global economic fears.
However, tensions flared immediately after the May 12 agreement. The US Commerce Department issued guidance suggesting Huawei’s Ascend AI chips could violate export controls. This action elicited a stern reaction from China.
In the meantime, US revocation of visas for Chinese students and China’s limits on the export of rare earth further complicate matters. Such issues pending are in danger of invalidating the desired progress in London.
Huawei AI Chip Export Controls Spark Controversy
Shortly after the Geneva agreement, the US Commerce Department warned that Huawei’s Ascend AI chips might breach export controls. The guidance cited that the chips were likely developed with restricted American technology.
China strongly protested this move. A spokesperson from China’s Commerce Ministry urged the US to “immediately correct its erroneous practices.” The export restrictions on Chinese tech firms, especially in advanced semiconductors, remain a major sticking point in US-China relations.
China Holds Leverage with Rare Earths
China dominates the majority of global rare earth mining and processing. The minerals are crucial in the manufacture of autos, robots, and defense systems. In April, China began to impose export licenses on seven rare earth elements. The action led to shortages and panic among foreign automakers fearing disruptions in supply.
Although President Trump did not mention rare earths explicitly, he implicated China on Twitter for breaching the trade pact.
Visa Revocations and Escalating Geopolitical Tensions
The US State Department, headed by Secretary Marco Rubio, issued visa revocations to numerous Chinese students, particularly those who are connected to the Chinese Communist Party or sensitive fields of study. There were over 270,000 Chinese students enrolled in the US during the 2023–24 school year.
The move was met with criticism from China as part of the “unilateral” US provocations aggravating trade and economic tensions. Marco Rubio justified the policy as crucial to national security.
Delicate Truce Has Tough Fight Ahead in London
US President Trump and Chinese President Xi Jinping last Thursday spoke in an effort at resetting relations. US Commerce Secretary Howard Lutnick will sit at the London talks, evidencing some US eagerness to hear Chinese grievances.
Yet, as differences persist regarding tariffs, export controls, rare earths, and visas, the prospects are unclear. Analysts caution that without reciprocal concessions, these rising tensions might wreck progress and deepen global economic instability.
The London talks will put to the test whether the two economic titans can manage their rising differences or whether their brittle détente will disintegrate under strain. The stakes are still high for the world economy and geopolitical calm.
