Tension in the trade war between the US and China as the two countries prepare for a new round of negotiations.

The US delegation, led by Finance Minister Scott Bexent, Commerce Minister Howard Lutnik, and Trade Representative Jamison Green, will meet with Chinese Vice Premier He Lifeng in London on Monday and Tuesday. The negotiations come at a delicate moment for the global economy, slowed by uncertainty and supply chain problems.

In April, the US froze some of the tariffs imposed by Trump to allow time for trade negotiations. However, these tariffs, as well as high import duties on Chinese goods, remained in effect after a US trade court ruled them illegal. The Trump administration now has to defend in an appeals court why the tariffs should continue to be applied.

The trade war between the two countries has led to a sharp slowdown in Chinese exports to the US, with a over 34% drop in May compared to the same month a year earlier. This may have prompted China to agree to new negotiations in London.

In China, the slow decline in the housing market over the past four years has reduced the savings of the middle class, causing households to spend less. Beijing is trying to compensate for this with a large-scale government campaign to build factories and increase exports.

However, the Trump administration fears that this export may destroy the remaining US manufacturing sector. It has imposed tariffs on China and other countries to balance trade imbalances.

The first round of negotiations in May in Geneva ended with a promise to temporarily reduce tariffs and hold additional talks. However, tensions have recently escalated after China imposed restrictions on the export of rare earth metals, affecting supply chains.

Trump's meeting with Chinese leader Xi Jinping this week seems to have reduced tensions. Now it remains to be seen what additional concessions Washington and Beijing can make for a broader economic agreement.

The negotiations in London come at a time when many factories in the US, Europe, and Japan are quickly depleting their stocks of rare earth magnets, predominantly produced in China. The goal of the talks will be to restore the supply of these strategic raw materials.