Will US threats over Iran be the last straw for Beijing?

The United States recently threatened sanctions against countries purchasing Iranian crude oil, specifically naming China as its primary target. Following a summit between President Xi Jinping and President Donald Trump, bilateral trade relations appeared stable, but this recent push has tested their relationship again. China has refused to be coerced, indicating it will not back down.

The United States has already implemented new sanctions against 60 individuals, companies, and vessels associated with Iranian trade, including those in mainland China and Hong Kong. China's response to these sanctions has been measured and strategic, focusing on precision strikes when threatened. This article examines two critical factors that could escalate tensions: a potential US overcapacity investigation and a possible withdrawal of China's Permanent Normal Trade Relations (PNTR) status.

The investigation could result in punitive duties exceeding 7.5%, triggering a retaliatory response from China, particularly in critical sectors like rare earths and minerals. A withdrawal of China's PNTR status would see a significant increase in US tariffs, potentially reaching 35-45%, disrupting bilateral trade since China's WTO accession in 2001.