The U.S and the Chinese cases for having more trade war leverage

The US-China trade talks in London are centered around leverage, with macroeconomic and microeconomic factors at play. China's economy is showing solid macroeconomic data, but the country has much to lose if China continues to restrict supplies of rare earth minerals and other essential goods. China's exports to the US fell 34.5% in May, and imports from the US also decreased, leading to a mix of moribund export activity and falling prices. This compounds China's challenges in grappling with a property bust and debt overhang. Chinese negotiators may be eager to make a deal to maintain stable economic conditions and good living standards. However, China has leverage tied to US reliance on specific Chinese exports, including rare earth minerals, electronics, and pharmaceuticals. By restricting these exports, China can potentially exact damage on the US economy that's far larger than the dollar value of the lost trade flows. The US gets vital goods from China that cannot be replaced anytime soon or made at home at anything less than prohibitive cost. President Trump has authorized his negotiating team to loosen export restrictions on jet engines and other products as part of the talks, which could open a new frontier for de-escalation across issues that are not normally part of trade talks.