China warns retaliation as Trump’s Iran tariff threat targets the discount oil Beijing depends on

China, Iran’s biggest oil buyer, signals retaliation as Trump’s tariff threat raises risks for Beijing’s energy imports and overseas investments.

• China warns of countermeasures after US threatens 25% tariffs over Iran trade
• China relies on discounted Iranian oil, buying 80% of Iran's exports last year
• US tariff threat may force China to reassess energy strategy and shift suppliers

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China on Tuesday warned of countermeasures after US President Donald Trump threatened to impose 25 per cent tariffs on countries doing business with Iran, a move that could disrupt Beijing’s reliance on discounted Iranian oil.

China is Iran’s largest oil buyer. Any escalation, analysts told PTI, risks forcing Beijing to reassess a key pillar of its energy import strategy.

Trump’s tariff threat and immediate response

Trump said on Monday that any country “doing business” with Iran would face a 25 per cent tariff on trade with the United States, potentially impacting major Iranian trading partners, including China, India and the UAE.

Responding to the announcement, Chinese Foreign Ministry spokesperson Mao Ning said, “There are no winners in a tariff war, and China will firmly safeguard its own legitimate and lawful rights and interests.”

Why Iran matters to China’s oil supply

According to data from Kpler, cited by PTI, China bought an average of about 1.38 million barrels per day of Iranian oil last year, accounting for roughly 80 per cent of Iran’s exports. Iranian crude has been sold at significant discounts due to sanctions, making it a key input for Chinese refiners.

China also imported around 400,000 barrels per day of Venezuelan oil last year at reduced prices, Kpler data showed.

Venezuela’s shift adds to Beijing’s pressure

The tariff threat comes as Beijing is already adjusting to political upheaval in Venezuela, a long-time ally and oil supplier. The fall of President Nicolas Maduro has weakened China’s access to Venezuelan oil and cast uncertainty over investments estimated at more than USD 106 billion, according to multiple reports.

Analysts quoted by the South China Morning Post said Trump’s moves on Iran and Venezuela together send a warning to Chinese policymakers about vulnerabilities in their overseas energy strategy.

Broader geopolitical squeeze

Trump’s tougher stance on Iran is part of a broader effort to reassert US influence in Latin America and beyond, which analysts say threatens Chinese investments in countries such as Panama, Venezuela and Cuba.

China had cumulative outbound direct investment of USD 4.5 billion in Iran in 2024, up 14.7 per cent from the previous year, according to official Chinese statistics.

Economic impact and next steps

Rajiv Biswas of Asia-Pacific Economics told the Post that the economic impact on China could be significant if the Iran-related tariff is applied on top of existing US duties on Chinese exports. The effect, he said, would depend on whether Beijing curtails trade with Tehran.

Some analysts argue China may increasingly pivot towards suppliers in the Persian Gulf if sanctions pressure on Iran intensifies, though such a shift could raise costs and reduce Beijing’s leverage over discounted supplies.

For now, Beijing has signalled resistance rather than retreat, setting the stage for another flashpoint in already strained US–China economic relations.

(With inputs from PTI)