Trump's tariff gambit over Iran risks derailing U.S.–China trade deal

• China imported over 1.2 million barrels per day of Iranian crude as of 2024, more than double 2017 levels, though imports fell 28% in January-November 2025 compared to the prior year
• Analysts warn the tariff threat could escalate to 145% rates as seen in previous trade wars and dash hopes for U.S. soybean exports to China
• The U.S. Supreme Court may rule Wednesday on the legality of Trump's tariff authority, while China could retaliate with sanctions on U.S. firms tied to Taiwan arms sales or antitrust probes of American tech companies

Summary: Trump's Iran Tariff Threat Endangers U.S.-China Trade Deal

Key Development:

President Trump announced immediate 25% tariffs on countries conducting business with Iran, directly threatening the fragile U.S.-China trade agreement reached in October 2025. China, Iran's largest trading partner, has vowed to take "all necessary measures" to defend its interests.

Critical Facts & Figures:

• Iranian crude oil shipments to China doubled between 2017-2024, reaching over 1.2 million barrels per day
• As of 2022, fuel accounted for significant trade between China and Iran (specific percentage not provided)
• China's imports from Iran fell 28% in January-November 2025 versus prior year, marking a fourth consecutive annual decline
• October's trade truce reduced U.S. tariffs on Chinese goods to lower levels from peaks exceeding 100% during spring tensions

Market Implications:

Analysts warn of potential tit-for-tat escalation, with tariffs potentially reaching 145% as seen in previous trade conflicts. U.S. soybean exports to China face elimination risk. China may retaliate through sanctions on U.S. firms involved in Taiwan arms sales or antitrust probes against American tech companies in China.

Key Context:

• Trump and Xi Jinping agreed to a one-year trade truce following their October 2025 meeting in South Korea
• Trump is expected to visit Beijing in April, with Xi's reciprocal visit later in 2026
• Both nations historically escalate tensions before major diplomatic meetings to gain negotiating leverage
• U.S. Supreme Court ruling expected Wednesday on the legality of Trump's tariff authority

Expert Assessment:

Analysts characterize Trump's move as eroding fragile trust and potentially driven by shifting attention rather than strategic calculation, though China remains prepared for various escalation scenarios.