Trump Moves Back Trip to China Over Iran War After Positive Trade Talks Between Top Officials
Summit Delay Request
Many refer to the current trade deal with China as a trade truce. Shippers would be forgiven for thinking of it as tenuous after the tension of escalating tariffs of trade war between the world’s two largest economies.
President Trump was scheduled to go to China for a summit with President Xi Jinping from March 31 to April 2nd. Not anymore.
Telling reporters yesterday that he wants and has to be here because of the Iran War, President Trump announced, “We’ve requested that we delay [the summit] a month or so, and I’m looking forward to being with them.”
This is a meeting shippers would like to see back on the official calendar quickly for the trade stability it could represent.
Summit Objectives
The primary goal reported for this summit between presidents is to stabilize and “reboot” the relationship between the U.S. and China.
As Trade Representative Jamieson Greer told ABC News, the summit is “not to fight about trade.” Trump and Xi aim for “managed stability” to prevent further economic confrontation.
President Trump wants to make sure China follows through with its large buying commitments on American goods while President Xi reportedly looks for security guarantees and tariff stability. Of course, rare earths sits in the middle of it all too.
Greer said in that ABC interview the meeting was also about (further) developing the relationship between the presidents.
Obviously, the better relationship between Trump and Xi, the better and more stable the relationship between the U.S. and China is going to be.
On the Heels of U.S.-China Trade Talks in Paris
The postponement of the summit between Presidents Trump and Xi does not mean trade talks between the countries is halted.
In fact, trade talks just happened in Paris the last couple of days (March 15th and 16th) between the U.S. and China. Trade Representative Greer and Treasury Secretary Scott Bessent met with Chinese Vice Premier He Lifeng.
According to a Reuters article published by CNBC, those trade talks were described as “remarkably stable” as well as “candid and constructive” by two sources familiar with the talks.
The talks were focused on shifting from aggressive trade wars to a more institutionalized “managed trade” model. And reportedly, not only does China remain committed to its purchasing agreements, it’s open to increasing them.
Are U.S. Geopolitical Moves Adding Pressure on China?
The U.S.-Israel strikes on Iran and the U.S. capture of Venezuelan leader Nicolás Maduro have significant impact on China.
China had friendly political and economic dealings with the removed regime heads of both those countries. Despite U.S. sanctions, Iran and Venezuela were sources of oil for China.
Official Chinese customs data usually reports zero imports from sanctioned countries, but third-party tanker-tracking and satellite analytics firms give figures for the amount of oil China gets from these countries. The figure actually could be higher than thought because oil tankers trying to evade sanctions often use Automatic Identification System (AIS) spoofing to broadcast false locations.
According to Kpler, a global trade intelligence company, China was getting1.38 million oil barrels per day (bpd) from Iran and 389,000 to 470,000 bpd from Venezuela. That’s somewhere in the range of 14 to 18% of China’s oil supply. For both Venezuela and Iran, most of their oil sales went to China.
Losing those oil supplies could add some economic pressure to China. However, Russia is China’s number one source for oil, reportedly supplying 17.5% of China’s imported oil. While these recent U.S. geopolitical moves could be seen as putting pressure on China and gaining leverage, it could increase China’s ties and partnerships with Russia. Russia likely is more than happy to increase its oil sales to China, especially as the U.S. has put pressure on countries not to buy Russian oil in attempt to end the Ukraine War.
Some are calling Venezuela and Iran new friction points between the U.S. and China; however, they were already friction points between the countries. Previously, they were friction points that were a problem for the U.S. in relation to China. Now, they’re friction points that are a problem for China in relation to the U.S.
It could be argued the moves give the U.S. a greater point of strength from which to enter negotiations with China. However, it could also be argued the Iran war and capture of Maduro add more tension, which could hinder talks.
Shippers have to wait and see. For the moment, there’s no indication of a break from the current trade deal or truce, whichever you prefer to call it, between the U.S. and China.
