How Iran and Venezuela attacks will change President Trump and Xi’s trade negotiations

Weeks before a high-stakes meeting between President Donald Trump and Chinese President Xi Jinping, China’s opposition to the US-Israel war on Iran is increasing tensions between China and the US.

The Middle East offensive that killed pro-China Ayatollah Khamenei and scores of other Iranian officials shows that the United States is redoubling its willingness to eschew diplomacy and launch risky military actions in pursuit of global goals. The war began less than two months after the United States attacked Venezuela and captured the country’s president, Nicolas Maduro and his wife. President Maduro and his wife are currently detained in New York City.

These actions also show that even if the tumultuous trade war between the United States and China settles into an uneasy détente, the Trump administration is prepared to rock the boat in countries where Beijing has significant influence.

The attack is unlikely to halt or compromise diplomacy between the two superpowers. But Tim Keeler, partner and co-head of international trade at Mayer Brown, said they would set the “mood music” for Trump’s upcoming summit with Xi in China.

The display of speed and force in the attack on Maduro was “nothing short of amazing” and served as a reminder to China of America’s military capabilities, Keeler said in a phone interview.

If the Iranian invasion unfolds in a similar way to Venezuela, “there could be a significant change in the nature of the background music for the talks,” he said.

Experts say that could affect both the negotiations themselves and the agreements that emerge from them. Others believe that the U.S. attack may give Trump a slight boost due to his relationship with Xi, but they point out that depending on how the war unfolds over the next few days, that advantage could shift to China.

President Trump is expected to visit China from March 31st to April 2nd. Ahead of that, U.S. and Chinese trade officials, including Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, are scheduled to meet in Paris to discuss possible tariffs and trade on U.S. soybeans. boeing Aircraft reported this week by Bloomberg.

The United States and Israel began airstrikes on Iran on Saturday, with President Trump initially citing regime change in Tehran as a key goal.

In the days since then, the administration’s explanation for both the timing and broader purpose of the strike has changed. Officials ultimately coalesced around a four-pronged justification for war: destroy Iran’s missile program, disable its navy, prevent Iran from acquiring nuclear weapons, and prevent Iran from supporting fighter jets across its border.

The fighting has disrupted markets and caused massive disruption to shipping through the Strait of Hormuz, a key energy corridor.

China, the world’s largest customer for Iranian oil exports, opposed the war and called for an immediate ceasefire.

“The Strait of Hormuz and its adjacent waters are important international trade routes for goods and energy. Maintaining security and stability in the region is in the common interests of the international community,” Liu Pengyu, a spokesperson for the Chinese embassy in Washington, told CNBC in a statement Thursday.

“China urges all concerned parties to immediately halt military operations, avoid further escalation of the tense situation, and prevent regional turmoil from causing major damage to global economic growth,” Liu said.

International oil prices had fallen from recent highs, but have soared due to supply disruptions, causing visible ripples in the global economy, including a sudden spike in U.S. gasoline prices.

But China and other Asian economies, which receive most of the oil shipped through the Strait of Hormuz, may face the greatest risks.

Bessent suggested on CNBC on Wednesday that developments in Venezuela and Iran are poised to inflict further damage on Beijing.

“China is very vulnerable on the energy front,” he told Squawk Box, noting that Asian economies were “paying a huge discount.”

“It’s obviously on hold at this point, but then we’ll go from there,” Bessent said.

Some analysts say the war could — at least for now — strengthen President Trump’s position, as China’s interest in maintaining dialogue with the United States outweighs growing concerns about American aggression.

“It definitely favors Trump in the short term,” China Macro Group analyst Jack Li told CNBC in an email.

“A U.S. administration that is motivated to attack and absorbs the backlash could appear to be coming from a ‘position of strength,’ which could give Beijing some level of alarm,” he said.

Li noted that the tone of China’s response to the US attack was “unusually” soft, especially compared to China’s more forceful condemnation of the Maduro attack.

Yue Su, chief economist at the Economist Intelligence Unit, agreed that war is unlikely to derail talks between Trump and Xi, despite the increased risks and uncertainties.

In fact, it could be part of the negotiations, he said. “For China, this is much more important than in the case of Venezuela. China is currently increasing its investments in the Middle East, so it needs to consider the potential ramifications.”

David Mir, head of China practice at political risk consultancy Eurasia Group, told CNBC that the US is not necessarily gaining leverage over Iran because there is no “obvious outcome that can be achieved with China based on these other developments.”

Still, Mehr added, a war could shape China’s response by increasing Beijing’s incentives to “engage in a way that gives hope to maintaining stability in bilateral relations.”

Experts stress that the Iran war is still in its early stages and that the balance of power could change significantly between now and the date of Trump’s trip.

“Three weeks is a long time,” Keeler said.

—CNBC’s Eamon Javers contributed to this report.