Negotiators from the United States and China have hammered out a preliminary agreement aimed at de-escalating their persistent trade tensions, a development that could potentially revive the flow of sensitive and critical goods between the world’s two largest economies.

Following two days of intensive discussions in London, officials from both nations announced they had agreed on a framework to implement a consensus reached during a previous round of talks in Geneva.

From London to leaders

American and Chinese negotiators emerged from nearly 20 hours of discussions, held in a Georgian-era mansion near Buckingham Palace, with a sense of cautious optimism.

China’s chief trade negotiator, Li Chenggang, confirmed that both sides had agreed on a structured approach to put into action the understandings achieved in Geneva last month.

The US and Chinese delegations will now take this newly forged proposal back to their respective leaders for approval.

While comprehensive details of the pact were not immediately disclosed, US negotiators expressed strong expectations that critical issues surrounding shipments of rare earth minerals and magnets from China would be resolved.

“Once the presidents approve it, we will then seek to implement it,” US Commerce Secretary Howard Lutnick told reporters in London.

US Trade Representative Jamieson Greer added that although no further meetings are currently scheduled, communication channels between the American and Chinese sides remain open and active, allowing for discussions whenever necessary.

The rare earth sticking point and a path to resolution

The London talks were largely convened at the urging of the Trump administration, which sought to solidify a pledge made by the Chinese government during last month’s Geneva discussions to ease restrictions on shipments of rare earths.

These critical minerals are essential components in a vast array of modern technologies, including electric vehicles, lasers, and mobile phones.

The disagreement over these exports had reignited open economic conflict between the US and China, raising concerns that their nascent trade deal, which included a tariff truce, could collapse.

Such a scenario would pose a fresh and significant threat to the global economy.

“We do absolutely expect that the topic of rare earth minerals and magnets with respect to the United States of America will be resolved in this framework implementation,” Lutnick affirmed.

He further indicated a reciprocal easing of US restrictions:

Also, there were a number of measures the United States of America put on when those rare earths were not coming. You should expect those to come off — sort of, as President Trump said, in a balanced way. When they approve the licenses, then you should expect that our export implementation will come down as well.

The Chinese Foreign Ministry and Ministry for Commerce did not immediately respond to requests for comment on the specifics of the agreement.

Greer also highlighted that the issue of fentanyl, which the Trump administration has cited as a rationale for imposing tariffs on China, remains a priority for the US president.

“We would expect to see progress from the Chinese on that issue in a major way,” he stated.

Export controls and the leverage of critical materials

The recent negotiations have underscored the growing significance of export controls in modern trade disputes, where access to rare minerals or advanced microchips can provide a substantial strategic advantage.

China currently controls a significant portion of the world’s supply of raw materials used in high-tech manufacturing.

This leverage became particularly apparent over the past several weeks, as complaints from American companies about looming magnet shortages prompted US President Donald Trump to request a direct call with Chinese leader Xi Jinping.

The US had accused Beijing of stalling on sales of these critical materials, although some delays may have been attributable to lengthy lead times within China’s permitting system.

European trade officials and automakers had also voiced concerns about disruptions to supplies from China.

In response, Washington moved last month to limit exports of certain US technologies, including chip design software, jet engine parts, chemicals, and nuclear materials.

In London, the US signaled a willingness to lift these restrictions in exchange for relief on rare earth shipments.

Following the Xi-Trump call last week, Treasury Secretary Scott Bessent, alongside Lutnick and Greer, were dispatched to the UK capital to break the deadlock with a Chinese delegation led by Vice Premier He Lifeng.

The US and China are currently about a third of the way through a 90-day reprieve on the crippling tit-for-tat tariffs they had imposed on each other through April.

The settlement announced in Geneva on May 12 had brought those duties down considerably, though trade between the two economic giants remains significantly disrupted.

China’s exports to the US, for instance, fell by a staggering 34% in May, according to Bloomberg News calculations, the largest drop since February 2020 when the initial wave of the coronavirus pandemic impacted the Chinese economy.

“We hope that the progress we made will be conducive to building trust,” China’s Li Chenggang said, reflecting a desire for a more stable trade relationship.

Market reactions and expert commentary

Financial markets have largely recovered from the bout of volatility that struck when President Trump first introduced his extensive tariff policies in early April, with MSCI’s all-country equity index ending Tuesday at a record high.

Currency markets, however, tell a slightly different story, with the US dollar showing weakness against its major counterparts.

The initial market reaction to the London announcement was minimal, with US equity futures edging slightly lower and the offshore yuan inching higher, while the yen remained little changed.

“Markets will likely welcome the shift from confrontation to coordination,” commented Charu Chanana, chief investment strategist at Saxo Markets, as quoted by Bloomberg.

However, she also tempered expectations: “But the absence of further scheduled meetings signals that we’re not out of the woods yet — it’s now up to Trump and Xi to approve and enforce the deal.”

Josef Gregory Mahoney, a professor of international relations at Shanghai’s East China Normal University, told Bloomberg that the biggest casualty of the trade war has been trust, not just lost sales.

He noted that China is proceeding with caution, aiming to avoid being drawn into what he termed the Trump “circus”.

“We’ve heard a lot about agreements on frameworks for talks. But the fundamental issue remains: chips vs. rare earths,” Mahoney stated.

Everything else is a peacock dance.

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Global temperatures soared this year, with May marking the second-hottest on record. Scientists have attributed an unprecedented Greenland heatwave during this period to the effects of climate change. 

Last month was the second-warmest May globally, which was only surpassed by the corresponding month in 2024, the EU’s Copernicus Climate Change Service (C3S) said in a monthly bulletin. 

Temperatures in May also rounded out the northern hemisphere’s second-hottest March-May spring on record, according to the bulletin. 

Global May temperatures

In May, the average global surface air temperatures were 0.53 degrees Celsius above the 1991-2020 average for the period at 15.79 degree Celsius. 

May 2025 was 1.40 degrees Celsius above the estimated 1850-1900 average used to define the pre-industrial level, the C3S bulletin noted.

The value is considerably lower than those in the range of 1.48-1.78 degree Celsius recorded from July 2023 to April 2025. 

After an exceptional period of heat, where 21 out of the previous 22 months saw global average temperatures surpass 1.5 degrees Celsius above pre-industrial levels, there was a temporary respite. 

However, experts indicated that this break was probably short-lived.

C3S Director Carlo Buontempo was quoted in a Reuters report as saying:

Whilst this may offer a brief respite for the planet, we do expect the 1.5C threshold to be exceeded again in the near future due to the continued warming of the climate system.

Greenhouse gases accelerate warming

The release of greenhouse gases due to fossil fuel combustion was the primary reason behind climate change and global warming.

Notably, the previous year registered as the warmest year ever recorded globally.

A separate research from the World Weather Attribution group of climate scientists, released on Wednesday, indicated that anthropogenic climate change increased the record-setting heatwave in Iceland and Greenland last month by approximately 3 degrees Celsius. 

This temperature rise led to substantial additional melting of Greenland’s ice sheet.

To avert the most severe impacts of climate change, nations committed under the Paris Agreement to strive to keep global warming below a 1.5 degrees Celsius threshold. 

This 1.5 degrees Celsius limit represents the agreed-upon maximum increase in global temperature.

Global temperatures have not yet officially surpassed the 1.5 degrees Celsius target, which is calculated as an average over many years.

Some experts argue that achieving the target is no longer feasible, and they advocate for accelerated reductions in CO2 emissions to minimise the potential for exceeding it and exacerbating severe weather events.

The Climate Change Service (C3S) maintains records dating back to 1940, which are verified against worldwide temperature data extending to 1850.

European temperatures

Meanwhile, in Europe, the average temperature for May was 0.29 degrees Celsius below the 1991-2020 average for the period. 

Surface temperatures were also cooler by 2.36 degrees Celsius than the warmest May in 2018. 

The spring of 2025 (March to May) in Europe saw land temperatures 1.04 degrees Celsius higher than the 1991-2020 average, making it the fourth warmest on record. 

The 2025 season was 0.46 degrees Celsius cooler than the record-breaking spring of May 2024, which reached 1.50 degrees Celsius above average. 

Moreover, the 2025 spring was just marginally cooler, by 0.10 degrees Celsius and 0.04 degrees Celsius, respectively, than the second and third warmest springs, recorded in 2014 and 2007.

Additionally, the average temperature for Europe for the last 12 months till May was 1.33 degrees Celsius higher than the 1991-2020 average. 

But, it was 0.34 degrees Celsius cooler than the highest 12-month average on record for Europe. 

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The United States and Mexico are moving closer to a trade agreement that would limit the impact of President Donald Trump’s proposed 50% tariffs on steel, by allowing a portion of imports to enter the US duty-free, according to a report by Bloomberg.

The arrangement, still under negotiation, would set a cap on Mexican steel shipments based on historical trade volumes, effectively reviving a framework used during Trump’s first term but with a higher threshold.

People familiar with the discussions cited in the report say the cap would be designed to “prevent surges” in steel imports without establishing a fixed numerical quota.

This model aims to reassure US steelmakers while providing flexibility for Mexican exporters and US end-users reliant on Mexican supply chains.

Commerce Secretary Howard Lutnick is leading the talks, which remain private.

Trump has not yet been directly involved, but his approval would be required for the deal to move forward.

Negotiators say the broad outlines of the agreement have been agreed upon, but final details are still being hammered out.

Cleveland-Cliffs, Nucor share prices fall in response

News of the potential softening in tariff policy affected markets late Tuesday.

Shares of US steelmakers, including Cleveland-Cliffs and Nucor, dropped sharply, declining by more than 7% and 4% respectively.

The Mexican peso, which had been under pressure earlier in the session, trimmed some losses after the news broke.

Mexico’s Economy Minister Marcelo Ebrard has been vocal in rejecting the premise behind the proposed 50% tariffs.

Speaking at an event on Tuesday, he said the US actually exports more steel to Mexico than it imports, calling the tariffs unjustified.

Ebrard said he made this case in meetings with US officials last week in Washington, where he was photographed shaking hands with Lutnick.

“We are waiting for their response, because on Friday we gave them the details of Mexico’s argument and we are right,” Ebrard told reporters Tuesday.

“So we are going to wait for their response which will probably be this very week.”

Steel deal part of broader US-Mexico realignment

The talks are unfolding against a backdrop of broader diplomatic repositioning between Trump and Mexican President Claudia Sheinbaum.

Washington has demanded tougher action from Mexico on immigration and drug trafficking, areas where cooperation remains uneasy.

Homeland Security Secretary Kristi Noem recently accused Sheinbaum of encouraging anti-deportation protests in Los Angeles—an allegation Sheinbaum strongly denied as “absolutely false.”

The prospective steel deal also comes just ahead of the Group of Seven summit in Canada, where Trump and Sheinbaum are expected to meet, potentially giving the agreement geopolitical significance as well as economic impact.

Steel trade tensions linger as industries diverge

According to Commerce Department data, the US imported about 3.2 million metric tons of steel from Mexico in 2023—roughly 12% of total US steel imports.

The 2019 agreement between the two nations during Trump’s previous term set import limits based on 2015-2017 averages, and the new framework is expected to exceed those levels while maintaining safeguards against sharp increases.

Trump’s announcement last week to double steel tariffs came alongside his endorsement of Nippon Steel’s proposed acquisition of US Steel Corp., positioning the move as a measure to protect domestic industry.

While the tariff hike has pleased steel producers, downstream manufacturers and construction firms have warned it could increase costs and disrupt supply chains.

If finalized, the agreement could mark a calibrated policy shift—protecting US industry while avoiding full-scale trade friction with a key partner.

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European stock markets showed a mixed and generally flat performance in early trading on Wednesday, as investors weighed positive developments in US-China trade negotiations against some underwhelming corporate earnings and awaited key economic data.

While a tentative trade agreement offered a degree of optimism, individual market movements were nuanced.

About 30 minutes into Wednesday’s trading session, the pan-European Stoxx 600 index was seen trading flat, indicating no cohesive directional momentum among individual sectors.

Looking at the major national stock exchanges, France’s CAC 40 emerged as an early front-runner, posting a gain of around 0.3%.

London’s FTSE 100 was last seen trading 0.1% higher, while Germany’s DAX index showed little change from its previous close.

US-China trade talks: a framework for agreement

A significant driver for global market sentiment was the news emerging from high-level trade talks between the United States and China in London.

After a second day of discussions, representatives from both nations announced they had reached an agreement on a framework to ease trade tensions, with the deal now awaiting approval from the leaders of the two countries.

“We have reached a framework to implement the Geneva consensus and the call between the two presidents,” US Commerce Secretary Howard Lutnick told reporters.

A critical component of this latest agreement involves Chinese restrictions on rare-earth exports to the US Lutnick stated that this is a “fundamental part” of the deal and that the US expects the issue “will be resolved in this framework implementation.”

He further indicated that US restrictions on sales of advanced technology to China, imposed in recent weeks, would likely be rolled back as Beijing approves rare-earth exports.

Global markets had a mixed initial reaction to this tentative consensus. Asia-Pacific markets climbed overnight on the apparent breakthrough.

However, US stock futures inched lower, with investors also looking ahead to US May inflation data, which could influence future Federal Reserve policy.

Corporate spotlight: Inditex sales miss

On the corporate front, Zara owner Inditex reported weaker-than-expected quarterly sales on Wednesday.

The Spanish retail giant also flagged a slower start to the summer season compared to last year, citing broader economic uncertainty.

Inditex posted revenues of 8.27 billion euros ($9.44 billion) for its fiscal first quarter (February 1 to April 30), slightly below the 8.39 billion euros forecast by LSEG analysts.

Net income for the quarter came in at 1.3 billion euros, just shy of the 1.32 billion euros analysts had estimated.

In other notable news, tech billionaire Elon Musk stated on Wednesday that he regretted some of the social media posts he made last week during an explosive and highly public dispute with his formerly close ally, US President Donald Trump.

This admission follows a period of escalating tension between the two prominent figures.

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In a digital world where alliances can shift as quickly as a viral tweet, tech visionary Elon Musk found himself in an uncharacteristic position on Wednesday: expressing public regret.

The target of his digital mea culpa? None other than US President Donald Trump, a figure with whom Musk had, until very recently, shared a notably close and strategically significant partnership.

This rare admission of regret from the often-unflinching billionaire signaled a potential, if tentative, de-escalation in an explosive public feud that had captivated onlookers and rattled market nerves.

The preceding week had been nothing short of a political soap opera.

A once-tight bond, which saw Musk appointed to spearhead the ambitious, budget-slashing Department of Government Efficiency (DOGE) under Trump’s second term, had spectacularly imploded.

The fallout left investors and political commentators alike anxiously pondering the future trajectory of Musk’s sprawling empire, particularly his flagship companies, Tesla and SpaceX.

Then came Musk’s concise, yet loaded, statement on his X social media platform: “I regret some of my posts about President @realDonaldTrump last week. They went too far.”

The spark: a ‘disgusting abomination’ and White House retribution

The fuse for this public detonation was lit by Musk’s fiery denunciation of the Trump administration’s proposed spending bill.

This sprawling piece of legislation, a cornerstone of Trump’s domestic agenda, was met with Musk’s unvarnished scorn.

He didn’t just disagree; he labeled it a “disgusting abomination” and, in a move that many saw as crossing a political Rubicon, urged for political retribution against any Republican lawmakers who dared to support it.

Such a direct challenge, especially from a figure of Musk’s stature and influence, was never going to pass unnoticed within the fortified walls of the White House.

And notice, they did.

Following the heated drama, President Trump, who is never one to shy away from a public confrontation, delivered a stern counterpunch during an NBC News interview on Saturday.

He warned Musk of “very serious consequences” if the billionaire actually acted on his apparent threat to bankroll primary challengers against incumbent Republican lawmakers who had backed the contentious bill.

“He’ll have to pay very serious consequences if he does that,” Trump declared, his words carrying an air of ominous ambiguity as he declined to specify what form these consequences might take.

Any hope of a swift reconciliation was decisively quashed when the President added, with characteristic bluntness, “I have no intention of speaking to him.”

The acrimony was a dizzying reversal from the public bonhomie of just a week prior.

Trump had then been lauding Musk’s service as the head of DOGE, an advisory body conceived to inject a dose of Musk’s famed efficiency into the sprawling federal bureaucracy.

But Musk had abruptly stepped down, citing deep-seated disagreements over the fundamental direction of government spending.

It was a move that, in retrospect, served as the prelude to his open, scathing criticism of the President’s signature legislation.

Musk’s initial critical posts online had triggered an immediate and forceful pushback from the administration.

This further culminated in Trump accusing his former ally of ingratitude and, perhaps more alarmingly for Musk’s shareholders, threatening a review of lucrative federal contracts awarded to his companies.

The Epstein gambit: an incendiary claim, a swift deletion, and lingering questions

The already white-hot tensions between the two titans then escalated to a near inferno.

Musk, in a series of posts that sent shockwaves across the internet, directly linked President Trump to the deceased and disgraced financier Jeffrey Epstein, who had died by suicide in federal custody in 2019 while awaiting trial on sex trafficking charges.

“Time to drop the really big bomb: (Trump) is in the Epstein files,” Musk typed into the digital ether, alluding to unreleased government documents rumored to detail Epstein’s extensive network of high-profile associates.

He didn’t stop there.

Musk further alleged that these supposed documents were being deliberately suppressed, hinting that they might contain politically damaging information about the President himself.

Musk offered no shred of evidence to back this explosive claim, nor did he specify which “files” he was referencing.

In a tantalizing follow-up, he urged his millions of followers to “mark this post for the future,” cryptically adding, “The truth will come out.”

The digital bombshell, however, had a remarkably short fuse.

By Saturday morning, both incendiary posts had vanished from Musk’s X account, deleted without a word of explanation, leaving a void filled with speculation and unanswered questions.

President Trump, when confronted with Musk’s allegations by NBC, brushed them aside as “old news.”

“Even Epstein’s lawyer said I had nothing to do with it,” he retorted.

It’s a matter of public record that President Trump has acknowledged knowing Epstein socially in the past, but he has consistently and vehemently denied ever visiting Epstein’s notorious private island or participating in any illegal activity.

Crucially, publicly released documents pertaining to the Epstein case do not accuse the President of any wrongdoing.

Musk’s subsequent deletion of the posts, followed by his midweek expression of regret, now suggests a calculated attempt to dial back the intensity of the confrontation.

Whether this signals a genuine desire for rapprochement, a strategic retreat in the face of presidential power, or simply Muskian unpredictability, remains to be seen.

The digital dust may be settling, but the underlying rifts in this high-stakes relationship may well linger, casting a long shadow over the intersection of tech, politics, and power.

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