Tehran – The economic dispute between China and the US has continued since January 2018, when US President Donald Trump began imposing tariffs and other trade barriers on China during his first term.
Trump’s so-called “liberation day” tariffs enacted this April sent another shockwave through the global trading system.
During his second term, Trump enacted a series of tariffs affecting almost every goods imported into the United States to around 60 countries where the US has the biggest trade obstacles. Nevertheless, Trump declared a trade war with China by imposing a combined 145% tariff rate on Chinese goods exported to the United States, which was retaliated for imposing a 125% obligation on US goods.
China surpassed the United States for the first time in 2015, when China’s crude oil imports reached 7.4 million barrels per day (BPD). China’s imports of crude oil were 11.96 million bpd in June. As the world’s fastest growing economy and top crude oil buyer, China is the largest buyer of Iranian crude oil, importing more than 1.8 million barrels per day from June 1-20.
Trump’s tariffs aim to slow China’s economic growth and reduce its growing global political impact. One reason for putting pressure on China by imposing such high tariffs is to disrupt China’s crude imports from Iran. China is also a major destination for US-approved Venezuela and Russian crude oil, but China follows a logical and independent policy by saving billions of dollars in import bills through discounts on gross prices, buying from three licensed countries facing Western sanctions.
China is known as the “factory of the world.” Many of the things American consumers buy today are labeled “Made in China.” The implication of Trump’s tariffs is higher prices for American consumers, and putting pressure on China is to cut off mainly independent buyers of Iranian crude oil and petrochemists.
According to Vortexa, about 80% of Iran’s crude oil exports average 1.5 million bpd, and so far this year they have traveled to China. Vortexa is a logistics company that provides real-time information to track the energy and freight market.
The Tehran Times reported in March that Iran’s total exports to China exceeded 1.8 million bpd, a jump of 50% from the 2024 average. This was also coincided with rising inventory levels for independent refinery hubs, also known as Teapot refiners, mainly in Shandong. Concerns about the additional US sanctions on Iran-related tankers combined with Israel’s war of attacks have prompted Chinese refiners to accelerate their energy resource stockpiling.
Meanwhile, the rise in oil prices due to the recent Israeli attack on Iran has not been that great. 7% within hours of military escalation. Oil prices plummeted to 5% (Brent $67.88, West Texas intermediate at $65 for intermediate at West Texas) after Trump gave a green light to China’s imports of Iranian crude oil. Crude oil prices are currently lower than in January.
The Center for Strategic and International Studies (CSIS) brings US and China’s commodity transactions to $58.4 billion per year. With big interests on both sides, Trump’s tariffs could be an expensive war.
Tariffs vs. sanctions
A tariff-based trade war is different from secondary sanctions. First, secondary sanctions aim to punish third-party buyers for doing business with the US Treasury and the dollar-based financial system. Critics believe that imposed tariffs work against secondary sanctions, as they undermine the economic interconnectivity that empowers sanctions.
Sanctions are designed to limit the economic involvement of a country, business, or individual actor. Tariffs, by contrast, are trade barriers aimed at protecting domestic industries by increasing import costs.
The tariffs Trump sees as a revenue-generating tool are now replacing sanctions as America’s main tool with diplomacy. In March, for example, Trump threatened to impose “secondary tariffs” on countries that continue to import Russian oil if Moscow refuses to use a US-brokered ceasefire in Ukraine. Also, in March, the administration imposed a 25% “secondary tariff” on Venezuelan oil buyers.