Representatives from the United States and China are meeting for a second day of talks in London on Tuesday, with the aim of defusing a trade dispute that is having a major impact on the global economy.

The meeting comes a month after an initial attempt at de-escalation in Geneva, which resulted in a partial agreement on easing tariffs imposed by both countries earlier this year.

The US delegation is led by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer. Commerce Secretary Howard Lutnick, whose agency oversees export controls, is also in London, having been absent from the previous round in Geneva. The Chinese delegation is led by Vice Premier He Lifeng.

The main point of tension in recent weeks remains the issue of rare earths. These materials, which are essential for the manufacture of electronic components and electric vehicle motors, have become a major sticking point, threatening global supply chains and the growth momentum of both powers.

China has a virtual monopoly on rare earth magnets. Their availability is hence a major strategic lever in the current negotiations.

US President Donald Trump described the talks as "positive," saying he had received "only good feedback" from his envoys, without specifying what that feedback was. At the same time, his economic adviser Kevin Hassett said he hoped for a "handshake" with the Chinese delegation on this sensitive issue, following a phone call last week between Donald Trump and Xi Jinping. During this exchange, the Chinese president reportedly agreed to resume deliveries of rare earths.

Kevin Hassett told CNBC that the US expected an immediate easing of Chinese export controls and a rapid resumption of delivery volumes. According to him, this concession by China could be in exchange for a relaxation of export controls on US semiconductors to China.

This position is a sharp departure from that of recent weeks. Last month, the Financial Times revealed that the Trump administration was considering adding several Chinese semiconductor manufacturers to the Commerce Department's export blacklist. However, some officials preferred to wait, fearing that this decision could harm trade negotiations.

Under the Biden administration, export restrictions on the most advanced chips had been put in place, mainly due to fears that these technologies could be used for military purposes. This was the "small yard, high fence" strategy.

While the London talks are a sign of détente, there is no indication that the two sides will reach a meaningful agreement. There are many fundamental differences, and the two countries are in any case engaged in a confrontation for global supremacy. Last week, Donald Trump said that Xi Jinping is "very tough" and that it is "extremely difficult to make a deal with him."