The Iran War Gave Beijing the Upper Hand. Now Xi and Trump Meet in Its Shadow.

When President Donald Trump arrives in Beijing on May 14 for his first visit to China since 2017, he will step into a diplomatic environment transformed by a war neither side anticipated. China's state news agency Xinhua confirmed the visit on May 10, announcing that Trump will pay a state visit "at the invitation of President Xi Jinping" from May 13 to 15 [1]. The summit was originally scheduled for March but was postponed after the United States and Israel launched airstrikes against Iran on February 28, killing Supreme Leader Ali Khamenei and triggering a regional conflict that has shut down the Strait of Hormuz for more than two months [2][3].

That delay—accidental as it was—may have been "one of the most consequential diplomatic gifts Beijing has received in years," according to a Brookings Institution analysis [4]. The Iran war has consumed American military bandwidth, spiked global oil prices by nearly 88% year-over-year, and handed China a suite of new bargaining chips at the very moment Trump needs Beijing's cooperation most.

Two Months That Changed the Equation

Trump announced the postponement on March 16, citing the Iran conflict [5]. Administration officials, including Treasury Secretary Scott Bessent, insisted the move was "purely due to logistics" and not a pressure tactic aimed at Beijing [4]. But the Chinese side was not persuaded. Ryan Hass, a former National Security Council director for China, reported that Chinese officials were "deeply frustrated to learn through the media" of the delay, indicating poor diplomatic coordination [4].

Behind the scenes, both governments worked to keep the meeting alive. Wang Yi, China's top diplomat, held at least three phone calls with Iranian Foreign Minister Hossein Amir-Abdollahian since the war began, positioning Beijing as a mediator even while voting against or abstaining from every UN Security Council resolution that would have imposed additional pressure on Iran [4][6]. When Washington sanctioned Chinese refiners buying Iranian crude, Beijing responded by invoking a "blocking rule" for the first time, directing Chinese companies not to comply with U.S. sanctions [6].

The summit was formally rescheduled after Bessent and Chinese Vice Premier He Lifeng agreed to hold preparatory trade consultations in Seoul on May 12–13, just days before the Beijing meetings [7].

The Oil Price Shock and Its Diplomatic Weight

The Iran war has produced what the International Energy Agency has called the "largest supply disruption in the history of the global oil market" [3]. Iran's retaliation shut down nearly all traffic through the Strait of Hormuz, which normally carries about 20 million barrels of oil per day—roughly 20% of global seaborne trade [3][8].

Source: FRED / EIA

Data as of May 4, 2026CSV

WTI crude, which traded near $56 per barrel in late December 2025, surged past $114 in April 2026 before settling around $110 in early May [9]. For China, the stakes are acute: approximately 38% of the oil transiting the Strait is bound for Chinese ports, accounting for about half of China's seaborne oil supply [8]. China's crude oil imports from the Gulf dropped 25% year-over-year in March 2026 [10].

This energy squeeze is the backdrop against which Trump arrives in Beijing. The U.S. Navy is actively blockading the Strait and intercepting tankers—including some bound for China, Iran's largest crude buyer [6]. That creates an awkward dynamic: Trump needs China's help pressuring Iran to reopen the waterway, but the blockade is itself inflicting economic pain on Beijing.

What's on the Table: Tariffs, Taiwan, and Rare Earths

The agenda for the summit spans trade, technology, Taiwan, Iran, and artificial intelligence [11][12]. But analysts at the Center for Strategic and International Studies (CSIS) caution that expectations should be modest: the visit will "represent a relatively modest step toward greater stability and predictability" rather than a breakthrough [11].

Trade and tariffs. The U.S. imposed tariffs of up to 145% on Chinese goods in 2025; China retaliated with 125% tariffs on American products [13]. Both sides are discussing a framework of managed trade—a standing body to determine purchase commitments and tariff reductions in non-strategic sectors [11]. China is reportedly considering a purchase of 500 Boeing aircraft and sustained imports of U.S. agricultural products. In return, Beijing wants predictability: a mechanism to resolve disputes before they escalate into further tariff rounds [11].

Rare earths. China controls the supply chains for rare earth elements and permanent magnets essential to military and industrial applications worldwide. In April and October 2025, when Xi threatened to restrict these flows, Trump backed down rather than escalate [6]. That precedent strengthens Beijing's hand considerably. China's decision to suspend rare earth exports "upended supply chains central to global automakers, with political and economic consequences across Europe, Japan, and South Korea" [14].

Taiwan. Across the half-dozen Trump-Xi exchanges since January 2025, Trump's readouts have centered on economic matters, while Chinese readouts have increasingly centered on Taiwan [6]. Beijing is pushing for an explicit U.S. statement opposing Taiwan independence—a shift from the current formulation of "not supporting" independence—and wants pre-negotiation on arms sales [6]. A $13 billion arms package to Taiwan has already been suspended [15].

AI governance. The two governments are reportedly considering establishing an AI safety dialogue, building on the 2023 San Francisco agreement between Xi and Biden to keep AI out of nuclear weapons systems [11][12].

The Trade Damage So Far

Bilateral goods trade between the U.S. and China has contracted sharply since the tariff war intensified. Total two-way goods trade fell from a peak of $691 billion in 2022 to an estimated $498 billion in 2025—a decline of roughly $193 billion, or 28% [13][16].

Source: U.S. Census Bureau / PIIE

Data as of Mar 1, 2026CSV

The Peterson Institute for International Economics estimates that without the trade wars launched since 2017, U.S. exports to China would have been nearly 60% higher—roughly $90 billion annually [16]. U.S. soybean exports to China fell to $3 billion in 2025, their lowest since 2018, as China substituted cheaper Brazilian alternatives [15][16]. The trade deficit with China narrowed by almost a third to $202 billion in 2025 [13], but that narrowing came largely from reduced imports—meaning American consumers and businesses simply bought less, at higher prices.

Meanwhile, supply chains have rerouted rather than reshored. The U.S. trade deficit with Vietnam widened from $123 billion to $178 billion, and with Taiwan from $73 billion to $147 billion, as manufacturers shifted production to avoid tariffs [13].

Source: World Bank Open Data

Data as of Dec 31, 2024CSV

China's trade as a share of GDP has declined from nearly 50% in 2010 to 37% in 2024, reflecting Beijing's deliberate pivot toward domestic consumption and self-reliance under its "dual circulation" strategy [17]. That declining dependence on trade gives Xi more room to absorb tariff pressure than a decade ago.

The Summit Scorecard: History of Promises Unkept

The May 2026 meeting will be the fifth major Xi-Trump encounter. The historical record suggests that in-person summits produce headlines but rarely durable policy changes.

At Mar-a-Lago in April 2017, the two leaders announced a cabinet-level "Comprehensive Dialogue" spanning four tracks and held a record nine phone calls that year [18]. But the Section 301 trade investigation was already underway, and by 2018, the dialogue structure was "effectively defunct"—three of the four tracks met only once before being swept away by the trade war [18]. Xi had staged a lavish "state visit-plus" for Trump in November 2017, complete with a private dinner in the Forbidden City and $250 billion in business deals—most of which were memoranda of understanding that never materialized [6].

At Buenos Aires in December 2018, Trump agreed to hold tariffs at 10% rather than raising them to 25% on $200 billion in goods, and Xi agreed to designate fentanyl as a controlled substance [18]. The tariff truce collapsed within months.

At Osaka in June 2019, both sides agreed to restart trade consultations. Xinhua's language was notably more assertive, insisting talks "should be equal" and "reflect mutual respect" [18]. The talks led to the Phase One deal in January 2020, which required China to purchase an additional $200 billion in U.S. goods. China never came close to meeting those targets.

At San Francisco in November 2023, the Xi-Biden summit produced an agreement to restore military-to-military communications and keep AI out of nuclear weapons systems [18]. Those channels have since atrophied under the second Trump administration.

The pattern is consistent: summits generate commitments that collapse under the weight of structural competition within months. Allen Carlson, a China scholar, told Time that "the chance of anything of substance emerging from these talks is little more than zero" [15].

Who Benefits More? The Case for Beijing's Advantage

The Council on Foreign Relations has argued that China enters the summit with the upper hand [6]. The case rests on several pillars.

First, the Iran war has consumed American strategic attention and military resources. As CNN reported, "an unfinished Iran war could give Xi the upper hand in Trump talks" [19]. Trump needs Beijing's help pressuring Tehran to reopen the Strait, giving Xi a chit he can trade for concessions on Taiwan or tariffs.

Second, China's rare earth dominance gives it a proven "break glass" tool. When Xi threatened to restrict exports in 2025, Trump folded [6]. That asymmetry has not changed.

Third, the summit itself confers legitimacy. Xi has told cadres that "the East is rising and the West is declining" and that "time and momentum" are on China's side [6]. A state visit by a U.S. president validates that narrative at a moment when China faces international criticism over its support for Russia in Ukraine, its military posture toward Taiwan, and its human rights record in Xinjiang. As the CFR analysis put it, "Beijing may use these meetings to 'manage' the United States, inducing Trump to put off necessary competitive steps" in exchange for bilateral stability [6].

The counterargument: Trump's willingness to impose tariffs exceeding 140% demonstrates that the U.S. retains enormous economic leverage. China's economy is growing slowly, youth unemployment remains elevated, and the property sector is still in crisis. Beijing wants this summit at least as much as Washington does—perhaps more, given that a high-profile visit signals normalcy to foreign investors at a time when capital flight from China is accelerating.

The View from the Sidelines

From Singapore to Brussels, third-party governments are watching with a mix of hope and anxiety [14]. The fear: a bilateral U.S.-China accommodation struck over their heads.

Taiwan is the most exposed. A senior Taiwanese official told Bloomberg: "What we are most afraid of is to put Taiwan on the menu of the talk between Xi Jinping and President Trump" [14]. Taipei is watching for any change in how the U.S. describes the cross-strait relationship, particularly concerned that Beijing will persuade Trump to express "support" for peaceful unification [14].

Japan faces its own pressure. Xi is determined to make Prime Minister Takaichi Sanae pay for describing a Taiwan contingency as a potential "survival-threatening situation," and may press Trump to distance himself from that position [14][6].

The European Union worries that a U.S.-China energy deal—in which Beijing purchases more American oil and natural gas—could push global commodity prices higher and displace European market share [14]. China's subsidized exports of electric vehicles, steel, and solar panels are already "hollowing out strategic manufacturing bases from Brasília to Berlin" [14].

South Korea, by hosting the pre-summit trade talks in Seoul, has positioned itself as a facilitator—but also risks being sidelined if the two powers reach agreements on semiconductors or critical minerals without Seoul at the table [7].

Across the Indo-Pacific, the hope, as Brookings describes it, is for a "Goldilocks" U.S.-China relationship: "good enough to avoid conflict and pressure to take sides, but not so good so as to suggest a G2 partnership in which decisions critical to their interests are made only in Washington and Beijing" [20].

Domestic Opposition on Both Sides

In Washington, congressional hawks are sounding alarms. Representative John Moolenaar, chair of the Select Committee on Competition with China, criticized Trump's decision to allow AI chip sales to China, arguing the CCP will use advanced chips "to strengthen its military capabilities" [21]. Steve Bannon and Tucker Carlson have pressured the administration from the right, while Paul Heer, former lead U.S. intelligence officer for East Asia, noted that hardliners "have no idea yet, one year in, how strong their voice is within this administration" [21].

Specific concessions that could trigger domestic backlash include any weakening of Taiwan language, suspension of arms sales to Taipei, or further relaxation of semiconductor export controls. Trump has already drawn criticism for agreeing to sell Nvidia AI chips to China—described by one expert as "a real headscratcher" that questions strategic coherence [15].

On the Chinese side, the pressures are less visible but no less real. Xi faces skepticism from PLA hardliners who view any accommodation on Taiwan as capitulation, and from economic nationalists who argue that China's "self-reliance" strategy means it does not need American goodwill. The difficulty for Xi is that the economy's poor performance—sluggish growth, deflation, and a real estate crisis—makes it harder to walk away from a deal that could stabilize the trade relationship and reassure foreign investors.

Was Iran a Genuine Obstacle or a Convenient Excuse?

The evidence suggests both. The Iran conflict created real logistical and political complications. The U.S. military was conducting active combat operations, the Strait of Hormuz was closed, and the diplomatic bandwidth for a presidential trip to a strategic rival was genuinely constrained [4][5].

But deeper issues existed before the war began. Brookings reported that Chinese officials involved in orchestrating the original March visit were frustrated by "inadequate staff-level preparation" [4]. Drew Thompson, a former Pentagon official, noted "real dialogue fatigue" between the two governments [15]. The Iran war may have provided cover for a postponement that both sides privately welcomed—giving Washington more time to manage the Middle East and Beijing more time to consolidate its leverage.

The fact that the summit was rescheduled for May, while the Iran conflict remains unresolved and the Strait of Hormuz is still contested, suggests the war was less an immovable obstacle than a politically useful delay. As one Brookings analyst observed, "the Iran excuse had a limited shelf life" [4].

What Comes Next

Bessent and He Lifeng will meet in Seoul on May 12–13 to lay the groundwork [7]. The summit itself on May 14–15 is expected to produce a joint statement, possibly a framework for managed trade, and perhaps an AI safety dialogue [11][12]. The larger question—whether the U.S. and China can stabilize a relationship defined by structural competition—will not be answered in two days in Beijing.

The historical pattern is clear: summits produce communiqués, not solutions. The test is whether the commitments made on May 15 survive longer than those made at Mar-a-Lago, Buenos Aires, Osaka, and San Francisco. Based on the record, skepticism is warranted.