Oil, trade, and strategy bind China and Iran in a growing alliance 

Shortly after targeting China with tariffs, President Trump is now focused on dealing with another American adversary: Iran. 

But instead of a trade war, President Trump is using diplomacy – and the threat of a real war – to make a deal on Iran’s nuclear program.  

RELATED: U.S.-China Trade War 

Iran and China are growing more connected, which is creating more challenges for U.S. policymakers. Here’s how: 

The $400 Billion Deal  

In 2021, China agreed to invest $400 billion in Iran over 25 years, going toward health care, ports, railways, and newer industries like telecommunications and information technology. In exchange, Iran will supply China with a steady supply of discounted oil.  

Circumventing Sanctions 

China buys 90 percent of Iran’s oil exports, despite sanctions on Iranian oil imposed by the U.S. and other western nations. Most of the Iranian oil sold to China is “redocumented” and carried by “ghost fleets” of ships to illegally evade sanctions. 

Trading Partners 

China is Iran’s largest business partner, accounting for 27 percent of the nation’s imports and exports. In 2022, China bought $22.4 billion worth of Iranian goods while supplying them with $15.6 billion worth of Chinese goods.  

Belt and Road 

In 2018, Iran agreed to join China’s “Belt and Road Initiative.” This initiative, which has also been called the “New Silk Road,” is China’s method of gaining influence in developing countries by investing in infrastructure and local economies. Since Iran sits between Asia and the Middle East and Africa, it was a crucial addition to the Initiative.  

Military Drills 

For five years now, Iran and China – along with Russia – have held joint naval exercises in the Persian Gulf, a crucial shipping lane which 20 percent of the world’s oil passes through.  

Diplomatic Cover 

China often advocates for Iran on the world stage. In March 2025, China called for an end to U.S. sanctions on Iran related to the nuclear program. At the U.N., China has opposed extending an arms embargo against Iran in 2020, a resolution to condemn the Iran-backed Houthi rebels, and a resolution ordering Iran to cooperate with the International Atomic Energy Agency for nuclear inspections.