Trump risks China trade war truce through Iran tariffs

• China purchases an estimated 80-90% of Iran's shipped oil exports and has significant infrastructure investments in the country, making it a primary target for the tariffs
• The November US-China truce reduced China's average tariff rate from 145% to 47%; the new Iran-related tariffs would push rates above 70%, making most US-China trade unviable
• Precedent exists for exemptions: India faced 25% tariffs for buying Russian oil while China was spared, likely due to broader deal negotiations at the time

Summary

Key Development: Donald Trump has announced 25% tariffs on nations trading with Iran, potentially threatening the November 2025 US-China trade truce and risking renewed escalation in the global trade war.

China's Position: As Iran's largest trading partner, China purchases an estimated 80-90% of Iran's shipped oil exports and maintains significant infrastructure investments there. However, Beijing has issued only a measured response through Foreign Ministry spokeswoman Mao Ning, stating "there is no winner in a tariff war" while pledging to defend its interests.

Critical Numbers:

• The truce reduced China's average tariff rate from 145% to 47%
• New 25% tariffs could push rates above 70%, making US-China trade largely unviable
• China's economy faces slowed growth and high unemployment, making additional tariffs particularly damaging

Market Implications: Analysts suggest China may receive an exemption from the Iran-related tariffs, similar to when India faced 25% tariffs for Russian oil purchases while China was spared. Trump's planned April visit to Beijing and his desire for relationship stability support this theory.

Stakes: The hard-won November truce included Chinese commitments to purchase US soybeans, de-blacklist American firms, and increase rare earth mineral access. Retaliation from China could eliminate these gains instantly.

Outlook: The article emphasizes uncertainty around how "doing business" with Iran will be defined and whether the existing US-China truce provides exemption. If China doesn't secure favorable treatment, severe retaliation is expected given its demonstrated leverage in previous negotiations with Trump.