US-China trade talks set to continue in London later today

After the first day of talks yesterday, there are positive murmurs but again it is only from the US side. Trump said that he was only getting “good reports” from his team while Lutnick and Bessent also said that the talks went well. The meeting seems to be more focused on export controls with both sides seeking concessions on key sectors of interest.

On the Chinese side, they’re offering up rare earth exports with a gesture of goodwill seen here. On the US side, they’re offering up key technology exports – mainly for chip production and aircrafts.

Again, I can see both sides striking a further compromise here as taking another step forward following the talks in Geneva.

But in the bigger picture, it remains to be seen if they can really bridge the gap to really address the core issues in the relationship. The US-China decoupling remains one of the bigger themes that have been expanding over the past decade and a little concession here and there doesn’t change that.

For the talks this time, I can imagine both sides offering a small gesture to try and move to the more important trade issues eventually. And markets will take to that with much optimism, as per usual.

But like the soybeans deal in 2019, don’t expect much of this to be upheld in the long-term with both sides still keeping their cards very close to their chest at the moment.