Trump Threatens to Disrupt US-China Trade Peace With Promise of Iran Tariffs

US Tariff Threats Put China Trade Truce at Risk

Photographer: Al Drago/Bloomberg

President Donald Trump has declared that any nation conducting business with Iran will face a 25% tariff on all transactions with the United States. This sudden move, announced via social media, could jeopardize the fragile trade ceasefire between the US and China, the largest importer of Iranian oil. Trump stated that the new tariffs would take effect immediately, though he did not elaborate on the specifics or enforcement of the policy.

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Wendy Cutler, a former top US trade official now at the Asia Society Policy Institute, commented that Trump’s announcement highlights the delicate nature of the current trade understanding between the US and China. She noted that even if the tariffs are not ultimately enforced, the threat alone has already strained the relationship and eroded mutual trust.

Photographer: Al Drago/Bloomberg

In Iran, massive crowds have continued to protest despite government crackdowns and warnings. Source: Bloomberg

Last October, President Trump and Chinese President Xi Jinping agreed to a temporary pause in their trade conflict during a meeting in South Korea. This agreement allowed the US access to rare earth minerals, which are essential for technology and defense industries and are primarily produced in China. During the dispute, China had restricted exports of these critical materials.

Following the truce, the average US tariff on Chinese imports dropped from 40.8% to 30.8%, according to Bloomberg Economics. However, the possibility of new tariffs now threatens to unravel this progress, especially as Trump prepares for a planned visit to Beijing in April.

Last August, White House adviser Peter Navarro dismissed the idea of imposing additional tariffs on China for its purchases of Russian oil, noting that existing tariffs on Chinese goods already exceed 50%. He cautioned against measures that could backfire on the US economy.

Chinese government ministries did not immediately respond to requests for comment regarding the new tariff threats.

Photographer: Al Drago/Bloomberg

Iran’s Role in US-China Relations

Tensions over Iran have long complicated ties between Washington and Beijing. The US has traditionally supported Israel and Saudi Arabia, while China has deepened its relationship with Iran, purchasing nearly 90% of Iranian oil exports and providing crucial economic support. In September, President Xi met with Iranian President Masoud Pezeshkian in Beijing, pledging to expand trade and investment cooperation.

China’s Oil Imports from Iran Remain Resilient

Although China has not officially imported Iranian crude since June 2022, independent data sources and traders report that shipments have continued despite US sanctions. China has developed alternative supply routes outside Western oversight, enabling imports of over 1 million barrels per day.

Discounted Iranian oil is vital for China’s private refineries and serves as a major energy source for its economy. Much of this crude is stored offshore upon arrival. By late December, offshore inventories had reached a two-and-a-half-year peak of more than 50 million barrels, according to analytics firm Kpler Ltd.

Photographer: Andrew Harnik/Getty Images

US Policy and China’s Trade with Iran

The Trump administration has intensified its “maximum pressure” campaign on Iran, threatening sanctions against buyers of Iranian oil and petrochemicals. However, in June, Trump unexpectedly allowed China to continue purchasing Iranian oil, surprising both oil traders and US officials. This move appeared to contradict longstanding US efforts to cut off Iran’s primary source of revenue.

According to Chinese customs data, China’s official imports from Iran fell by nearly 28% year-over-year in the first 11 months of 2025, totaling $2.86 billion. Major imports include plastics such as polyethylene, metals like iron and zinc ores, and chemicals used in industrial applications.

Chinese exports to Iran also declined by almost 23% during the same period, reaching $6.2 billion. These exports mainly consist of compressors, automobiles, mobile phones, and electric motors and generators. Overall, trade with Iran represents less than 0.2% of China’s total trade volume.

Reporting assistance by Colum Murphy.

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