TLDR
- US and China reached a framework agreement during London trade talks to revive sensitive goods flow, but it still needs Trump and Xi approval
- China pledged to speed up rare earth metal shipments while the US agreed to ease some export controls
- Stock futures fell slightly as markets gave a muted response to the trade deal announcement
- No additional meetings are scheduled between the two sides after the marathon 20-hour London negotiations
- Consumer price index data for May is expected to show inflation rising to 2.4% amid concerns about tariff impacts
US and China officials completed two days of trade negotiations in London with a preliminary agreement that could ease tensions between the world’s largest economies. The framework deal now requires approval from Presidents Donald Trump and Xi Jinping before implementation.
US stocks ended higher as investors bet on positive results out of trade talks between the US and China. The negotiations in London are aimed at defusing a tariff dispute that has roiled global markets this year https://t.co/LJMnlEtr3C pic.twitter.com/UAZRfMqsJv
— Reuters Business (@ReutersBiz) June 11, 2025
Commerce Secretary Howard Lutnick announced the agreement after 20 hours of negotiations at Lancaster House. The talks focused on reviving the Geneva consensus that previously reduced tariffs between the nations.
Key Trade Concessions Agreed Upon
China committed to accelerating shipments of rare earth metals that are essential for US automotive and defense industries. These materials have been a major point of contention in recent trade disputes.
The United States agreed to ease certain export controls in exchange for improved rare earth access. This represents a shift in Washington’s approach to technology restrictions.
Chinese Vice Premier He Lifeng led Beijing’s delegation during the marathon negotiations. He called for both countries to use their trade mechanism to improve cooperation and reduce misunderstandings.
The agreement addresses two critical issues that have strained bilateral relations in recent months. US officials had accused China of deliberately slowing magnet exports to American companies.
Meanwhile, Beijing expressed anger over new US controls on chip design software and jet engines. Student visa restrictions also became part of the broader trade friction between the nations.
Market Response Remains Cautious
Stock futures declined slightly following the announcement as investors awaited more details about the agreement. S&P 500 and Dow futures fell approximately 0.2% in early trading.
The offshore yuan showed little movement against the dollar after the news broke. Chinese onshore stocks gained 0.8% at market close, marking their strongest performance in nearly a month.
European markets remained largely unchanged as traders processed the limited information available about the deal. The muted response reflects uncertainty about whether the framework will receive presidential approval.
Charu Chanana from Saxo Markets noted that markets welcome the shift from confrontation to coordination. However, she emphasized that final approval from both leaders remains crucial for implementation.
No additional meetings are scheduled between US and Chinese negotiators following the London talks. Both sides indicated they communicate regularly but did not commit to specific future dates.
The agreement comes as both nations work within a 90-day reprieve from escalating tariffs. The Geneva settlement had previously reduced duties but trade flows remain disrupted from earlier conflicts.
Consumer price index data for May will be released later today and could show tariff impacts on inflation. Economists expect the headline rate to reach 2.4% month-on-month with core inflation at 2.9% year-on-year.
The Federal Reserve’s upcoming policy meeting next week adds pressure to resolve trade uncertainties. Investors will monitor whether tariff costs are being passed to American consumers through higher prices.
China’s exports to the US fell in May by the largest amount since early 2020 when the pandemic disrupted global commerce. This decline highlights ongoing challenges in bilateral trade relationships despite diplomatic efforts.
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