Trump just rolled out another tariff threat, and this time Iran's trading partners are in his crosshairs. On January 12, the US president announced a blanket 25% tariff on any country "doing business" with Tehran.
The international press immediately fixated on China—Iran's biggest trade partner. Reuters warned this could reignite the US–China trade war and shred the fragile truce both sides hammered out last year. But Chinese scholars aren't buying it. They say Trump lacks the nerve to slap Beijing with new tariffs, because China will hit back hard—and make him regret it.
Anti-government protests erupt in Iran. (AP photo)
The Financial Times reported on January 12 that these tariffs—which took effect immediately—could slam China, India, Turkey, Pakistan, the UAE, Brazil, and Iraq. All of them trade heavily with Iran. Russia sealed a new free trade deal with Iran in 2025, making it another potential target.
CNN pointed out the stakes for Beijing. China trades with both Iran and the US, so if Washington applies these tariffs, Chinese goods entering America could see costs spike. The network recalled that after last year's summit in Busan, South Korea, the Chinese and US presidents agreed to pause portions of their tariff war—a temporary truce.
Iran as Flashpoint, Again
Reuters published a piece on January 13 titled "Trump's Iran Tariff Threat Risks Reopening China Rift." The article traced how Iran became a powder keg in US–China relations during Trump's first term (2017–2021).
Back then, Washington tightened sanctions on Tehran and blacklisted Huawei, accusing the Chinese telecom giant of selling tech to Iran. That led to the arrest of Huawei founder Ren Zhengfei's daughter, Meng Wanzhou, in Canada—triggering a diplomatic crisis and sending bilateral tensions through the roof.
Now Trump's targeting Iran again. If he follows through, total US tariffs on Chinese exports could exceed 70%—way higher than the rates both sides agreed to last October when they dialed down their trade fight.
It's still unclear which countries or entities Trump will actually target. He hasn't named China explicitly. But Reuters noted Trump has a track record of making bombastic statements that could upend US foreign policy—only to back off later.
US–China "truce" forged in Busan last year now at risk if Trump's Iran tariffs target Beijing. (AP file photo)
Beijing Calls Trump's Bluff
Wu Xinbo, Dean of Fudan University's School of International Relations, told Reuters that China sees through Trump's posturing. "China will call (Trump's) bluff. I can assure you that Trump has no guts to impose the extra 25% tariffs on China, and if he does, China will retaliate and he will be punished," said Wu.
Another Chinese scholar pushed back on the narrative that China and Iran are economically intertwined, noting that "China and Iran are not as close as in the public imagination".
China Customs data backs that up. Beijing has dramatically reduced imports from Iran in recent years. Through November last year, China imported just 2.9 billion USD worth of Iranian goods—a far cry from the 21 billion USD peak in 2018, during Trump's first presidency.
Some sources claim China's major oil companies stopped doing business with Iran in 2022. Yet China's purchases from Tehran still run into the billions, thanks to independent refiners handling shipments.
China as Convenient Scapegoat
Wang Jin, a researcher at Beijing's Dialogue Think Tank, told reporters that "China is just an excuse, a kind of disguise for the Trump administration, to impose new pressure (on) Iran."
Chinese Foreign Ministry spokesperson Mao Ning responded to Trump's tariff threat on January 13. She stated that China's position on tariffs is crystal clear: tariff wars produce no winners. Beijing will firmly defend its legitimate rights and interests.
Analysts warn that Trump's renewed attempt to cut Iran off from global trade could heighten worries about the Belt and Road Initiative. Iran serves as a strategic hub for Chinese goods heading to the Middle East.
This tariff gambit has cast doubt on Trump's planned April visit to China. Observers had expected him to seal a comprehensive trade deal with Beijing during that trip.
The Wall Street Journal echoed Reuters' concerns, warning that new tariffs on Iran's trading partners could wreck the US–China trade truce.
But Reuters also cited Xu Tianchen, a senior analyst at the Economist Intelligence Unit, who questioned whether Trump's tariff policy is even enforceable. "Last year he announced tariffs related to 'illicit' Russian oil trade, but their implementation was patchy." Xu said.
He went on stating that "Trump is also the kind of person who likes bullying the weak," Xu said. "He should manage his actions to avoid these tariffs escalating into direct confrontation with China".
Deep Throat
** The blog article is the sole responsibility of the author and does not represent the position of our company. **
Steven Rattner just got back from China, and he's not mincing words. The former Treasury advisor under Obama published a stark assessment in The New York Times on February 10 with a title that lands like a gut punch: "I Just Returned From China. We Are Not Winning."
Rattner spent a week on the ground touring AI labs, EV factories, robotics firms, and pharma companies – and what he documented should terrify anyone betting on Trump's tariff strategy to slow Beijing down. The reality is blunt: China is leaping ahead in cutting-edge sectors from artificial intelligence to humanoid robots, and slapping duties on imports won't change that trajectory one bit.
A Treasury insider issues a blunt warning: Steven Rattner documented China's technological surge in The New York Times.
Washington's China Delusion
A few weeks back, Rattner sat through a New York dinner where senior trade experts argued over China strategy. Some backed Trump's confrontational playbook – tariffs, export bans, the works. Others pushed for traditional diplomatic engagement. Rattner, who's been investing in China for years and had just wrapped his week-long tour, dismissed both camps outright.
Steven Rattner
Make no mistake: neither approach will work, because China is both a formidable competitor and an irreplaceable manufacturing hub. You can't negotiate or bully your way around that. The only real path forward? America needs to fix its own broken house and outcompete China where it actually has advantages – not chase phantoms with tariff threats.
Rattner pulls no punches on Trump's first year back in office: the chaos has already set America back. Beyond manufacturing, China now threatens US dominance across fast-growing industries – artificial intelligence, pharmaceutical R&D, advanced robotics. The turbulence from the White House isn't just noise; it's actively undermining American competitiveness while Beijing executes a coherent industrial strategy.
Power and Talent: China's AI Edge
What Rattner saw in AI left him shaken. Sure, the US still leads in cutting-edge semiconductor chips, but China controls something more fundamental – electricity. China's power generation capacity exceeds America's by more than double, yet data center electricity costs run half of US rates. When the foundation of AI infrastructure is cheaper and more abundant in Beijing than in Silicon Valley, the math gets uncomfortable fast.
But the real secret weapon is human capital. Rattner met waves of young Chinese entrepreneurs whose drive and intellect match any Silicon Valley cohort – including one billionaire still sleeping in his office. That's not anecdote; it's evidence of a system channeling massive ambition into strategic sectors while America argues about tariff percentages.
Obama-era advisor pulls no punches: Rattner (right) with former President Obama (left) – now delivering hard truths about America's competitive decline.
And despite Trump's tariff offensive, the numbers don't lie: China posted a record $1.2 trillion trade surplus last year. It remains the world's export champion, proving that tariffs haven't dented global reliance on Chinese manufacturing. Everyone still depends on "Made in China" – with or without duties.
Electric Shock: Xiaomi's Five-Year Leap
Consider automobiles. Rattner toured Xiaomi, a company that made smartphones and electronics five years ago and only announced its EV push in 2021. What he witnessed in that factory reads like industrial sci-fi: "gigantic machines resembling mechanical dinosaurs effortlessly and precisely fitting aluminum body parts into vehicles on a production line in a massive factory where workers were barely visible". In the showroom sat a yellow sports car that could pass for a Porsche.
Five years from phones to Porsches: Rattner witnessed Xiaomi's stunning leap into electric vehicles – a timeline that should alarm Detroit.
Ford CEO Jim Farley admitted last summer that Chinese in-car technology is "far superior" to American models, calling China's progress "the most stunning experience I've ever seen". Shortly after, Ford halted production of its F-150 electric truck and took a brutal $19.5 billion write-down on EV projects. That's not a data point – it's a white flag.
Robots and Drugs: The Next Frontiers
Rattner also visited a robotics firm where plastic-toy-like devices moved fluidly across the floor, demonstrating progress in humanoid robots designed to replace specific human tasks. The scale is staggering: in 2024, China installed nearly nine times more industrial robots than the United States.
The humanoid revolution is here: Rattner toured Chinese robotics firms racing ahead in automation while America debates tariffs.
In pharmaceuticals, the reversal is just as stark. A few years ago, China was still licensing drug patents from overseas companies. Now China licenses more drugs outward than it imports, and its clinical trial volume has overtaken America's. That's a complete inversion of the innovation hierarchy in less than a decade.
Beijing's Strategic Edge
Rattner credits China's technological surge to effective government coordination. When Beijing recognized it was falling behind in AI, it declared catch-up a "national priority" and delivered – funding research, relaxing regulations, and building massive power capacity with visible results.
Even under ideal conditions, competing with China would be daunting. But the reality is far from ideal: Trump's erratic policies have placed America in an extremely disadvantageous position. The US needs to rethink industrial policy and mobilize government resources for strategically critical industries – something the current administration shows no sign of doing coherently.
Fix America First
The first step? Reverse Trump's cuts on scientific research and other critical areas. Rattner admits he's skeptical about democratic governments picking corporate winners, but insists "we no longer have the luxury of confining Washington to the sidelines". America should focus on future industries – not Trump's nostalgic fixation on traditional metal-processing manufacturing.
On critical minerals, America's constraint isn't scarcity – it's a byzantine approval process for mining and processing facilities that strangles domestic production. Regulatory gridlock, not geology, is the bottleneck.
Rattner's bottom line is unambiguous: Trump – or anyone else – must face one fact: imposing tariffs or chasing trade deals simply cannot defeat China. To surpass China, it has to “begin at home”, by “getting our own economic house in order". He urges Trump to scrap the suite of ineffective policies he's rolling out.
This isn't the first time Rattner has sounded this alarm. Last December, he told Bloomberg the same thing: to beat China, you can't rely on export controls or trade measures to "slow China's development pace". "America can neither defeat China on the battlefield nor at the negotiating table," he emphasized, insisting America's only option is to do its own work better.
