US Commerce Secretary Howard Lutnick said on Tuesday trade talks with China were going well as the two sides met for a second day in London, seeking a breakthrough on export controls that have threatened a fresh rupture between the superpowers.

US and Chinese officials are trying to get back on track after Washington accused Beijing of blocking exports of rare earth minerals that are critical to its economy, straining ties after they struck a preliminary deal in Geneva last month to step back from a full-blown trade embargo.

White House economic adviser Kevin Hassett said on Monday that the US was ready to agree to lift export controls on some semiconductors in return for China speeding up the delivery of rare earths and magnets.

"(Talks went on) all day yesterday, and I expect (them) all day today," Lutnick told reporters. "They're going well, and we're spending lots of time together."

Trump's shifting tariff policies have roiled global markets, sparked congestion and confusion in major ports, and cost companies tens of billions of dollars in lost sales and higher costs.

But markets have made up much of the losses they endured after Trump unveiled his sweeping "Liberation Day" tariffs in April, aided by the reset in Geneva between the world's two biggest economies.

The second round of US-China talks, which followed a rare phone call between Trump and Chinese President Xi Jinping last week, comes at a crucial time for both economies.

Customs data published on Monday showed that China's exports to the US plunged 34.5 percent in May, the sharpest drop since the outbreak of the COVID pandemic.

While the impact on US inflation and its jobs market has so far been muted, tariffs have hammered US business and household confidence and the dollar remains under pressure.

DISCUSSING DISAGREEMENTS

The talks have been led by US Treasury Secretary Scott Bessent, Lutnick and US Trade Representative Jamieson Greer, with the Chinese contingent helmed by Vice Premier He Lifeng.

The talks ran for almost seven hours on Monday and resumed just before 1000 GMT on Tuesday, with both sides expected to issue updates later in the day.

The inclusion of Lutnick, whose agency oversees export controls for the US, is one indication of how central rare earths have become. He did not attend the Geneva talks, when the countries struck a 90-day deal to roll back some of the triple-digit tariffs they had placed on each other.

China holds a near-monopoly on rare earth magnets, a crucial component in electric vehicle motors, and its decision in April to suspend exports of a wide range of critical minerals and magnets upended global supply chains and sparked alarm in boardrooms and factory floors around the world.

Kelly Ann Shaw, a former White House trade adviser during Trump's first term and now a trade partner at the Akin Gump law firm in Washington, said she expected China to reaffirm its commitment to lift retaliatory measures, including export restrictions, "plus some concessions on the US side, with respect to export control measures over the past week or two".

But Shaw said she expected the US to only agree to lift some new export curbs, not longstanding ones such as for advanced artificial intelligence chips.

In May, the US ordered a halt to shipments of semiconductor design software and chemicals and aviation equipment, revoking export licences that had been previously issued.