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London Calling: Is the U.S.-China Ceasefire Holding?
Photo: Chris Ratcliffe/Bloomberg via Getty Images
Trustee Chair in Chinese Business and Economics > Trustee China Hand
The tentative consensus the U.S. and China reached in Geneva on May 12 began to fray almost immediately after being issued due to differing understandings of what each side had pledged to do. The Trump administration was frustrated with China’s reticence to remove export controls on a set of seven key rare earth elements which were put in place in April, making them ostensibly a part of the agreed upon terms in Geneva. The Chinese side claimed that since the export controls were aimed at addressing the potential dual-use applications of the minerals, they were compatible with international law and the agreement. Conversely, Beijing expressed frustration with the U.S.’s continued tightening of export controls, including released guidance on extraterritorial restrictions on Huawei’s chip sales throughout the world, including within China.
This led to a broader deterioration in the relationship, with Secretary of State Marco Rubio announcing steps to revoke the visas of Chinese students studying in the U.S. and a series of new export controls on jet engines, ethane and semiconductor design tools in response to China’s continued rare earth controls. This breakdown culminated in a call between Presidents Trump and Xi on June 5, where they discussed the potential collapse of the ceasefire and agreed to send negotiators to London the following week to find a resolution. The call itself had been an uncertain outcome, given differing negotiating styles – Trump’s desire to hash out deals at the head-of-state level, and Xi’s typical refusal to engage in direct discussions without pre-negotiated outcomes. The Chinese reporting noted specifically that Xi “held phone talks with U.S. President Donald Trump at the latter’s request,” implying that China was beneficent in being open to listening to the U.S. leader’s worries.
The exact terms of what was agreed to in London remained uncertain until June 26, when both sides announced that a deal was reached between the two parties. As part of that agreement, China would expedite reviews of export licenses for its rare earth export controls in exchange for the U.S. reversing recently imposed export controls and continuing to allow Chinese students to study in the United States.
The timing of the agreement itself is notable. After negotiations in Geneva, there was a clear joint statement released shortly after with takeaways on what had been agreed, even if such an understanding proved to be fleeting. It took over 20 days for the finer details to be hashed out and formed into a workable agreement after the London meeting. For that period, a variety of statements and social media posts from the President and senior administration officials served as the main outcome of the talks. This added a degree of uncertainty to the current state of the relationship. Indeed, though President Trump and Commerce Secretary Lutnick have announced the deal was signed on June 24, the full text has yet to be released – an occurrence that is at best annoying and at worst a signpost of a worrying trend in waning transparency.
The London deal, identified through the statements from Chinese and U.S. officials, largely preserves the equilibrium reached in Geneva by addressing the primary U.S. concern: China’s rare earth export controls. The table below gives a sense of what has been stripped away or changed as a part of the Geneva and London negotiations (See Figure 1).
Remote Visualization
The meeting in London and subsequent delay in confirming a deal have demonstrated the fragility of what was agreed to in Geneva in May and also changed longstanding assumptions about how economic diplomacy between the U.S. and China is conducted. The Biden administration often sought to communicate export controls as “off the table” – an enduring feature of U.S. policy that China would have to live with. This is with the caveat that such wide-ranging negotiations with China were not a feature of the relationship under Biden in the first place. While the most consequential controls on chips remain in place, the use of seemingly intentionally fleeting controls is novel in relation to China.
China has also learned it has its own “card to play” in Trump’s parlance. While it has hinted at its role in critical supply chains with earlier export controls on graphite, gallium, and germanium, key materials in the battery and semiconductor supply chains respectively, the most recently introduced controls on rare earths highlighted just how painful dependency on China can be. China has demonstrated its own capacity to find and use leverage, and its leadership is likely walking away with a greater awareness of their ability to impose costs and exercise agency in the bilateral relationship. That China has agreed simply to expedite approvals of export licenses for U.S. firms rather than scrap the controls completely is a sign of growing confidence in China’s own ability to exploit chokepoints.
This recent tit-for-tat has reminded both sides of an unavoidable truth – the U.S. and China are for now deeply intertwined with each other and attempts to thrash out of the ties which bind them will be painful – no matter how much they would like to will it away. At the same time, the escalating use of these sources of leverage creates greater incentives to promote self-reliance and decoupling. In rare earths, where lead times for mining and refining can prove long and the knowledge and expertise are so concentrated within China, these efforts may take longer than many policymakers around the world, not just in the U.S., would prefer.
London is a reminder that the current status quo will require constant maintenance. Both sides are looking for ways to maintain levers of control. Now that China has exercised greater agency and willingness to use its own economic security tools, the two appear locked in a tug of war – just how stable that arrangement is remains deeply uncertain.
Despite the administration’s insinuations otherwise it is also worth repeating that both Geneva and London only set out the terms of an economic ceasefire; neither contain any components of a long-term deal. The core problems which seem to motivate the Trump administration: China’s persistent trade surplus and the non-market character of much of China’s economy, so far remain entirely unaddressed by the talks. Likewise, one of China’s main concerns, the series of restrictive measures on semiconductors coming out of Washington, despite the scrapping of other export controls, appear to still be off the table. There is a risk that both sides are learning a lesson that is not conducive to a final deal – hold on to any and all sources of leverage in the bilateral relationship. If that is the spirit of a theoretical “grand bargain,” one is left wondering how grand it will really be.
Related Trustee Chair Activity
Scott Kennedy, "Does Xi Have Trump's Number," Foreign Policy, June 16, 2025.
Ilaria Mazzocco, “Analyzing the Impact of the U.S.-China Trade War on China’s Energy Transition,” CSIS Commentary, April 22, 2025.
Scott Kennedy and Ryan Featherston, “Bilateral Trade Balances: Ignore Them,” Trustee China Hand Blog Post, April 15, 2025.
Scott Kennedy, “Why Beijing Thinks It Can Beat Trump,” Foreign Policy, April 10, 2025.
Scott Kennedy, Ilaria Mazzocco, and Ryan Featherston, “China and the Impact of ‘Liberation Day’ Tariffs,” CSIS Critical Questions, April 4, 2025.
Scott Kennedy, “The United States’ Illiberal Turn Recasts a Potential Deal with China,” CSIS Commentary, March 13, 2025.
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