Iran war to overshadow talks on trade, Taiwan at historic Trump-XI meeting

President Trump and Chinese President Xi Jinping have a lot on their plate when they meet this week in Beijing.

The leaders of the world’s reigning superpowers will spend two days hammering out details of a new trade pact, extending a critical minerals deal, discussing artificial intelligence risks, nuclear weapons and a potential $14 billion U.S. weapons package for Taiwan.

Looming over all those discussions is the Iran war, which has caused the Trump-Xi summit to be postponed once. The leaders have much to gain from each other when it comes to the Iran war, which has left both men in much weaker positions than they were before it started roughly 10 weeks ago.

Mr. Trump appears eager to end the fighting as U.S. voters’ dismay with soaring oil and gas prices has battered his approval ratings. He had hoped to head into the summit with control over the oil produced in Venezuela and Iran, two of the largest suppliers to Beijing.

Mr. Xi also needs the war to end. China relies on Iran for low-cost oil and counts Middle Eastern nations among its largest trading partners. Any disruption in the region affects the Chinese economy, which is already facing challenges.

Beijing has weathered the reduction in oil shipments by drawing on oil and gas reserves it had set aside for a potential conflict over Taiwan, raising questions about Mr. Xi’s ability to handle that situation.

The war has led to the closure of the Strait of Hormuz, causing a spike in fuel prices that rippled through other sectors and beyond the Middle East. It has left hundreds of ships stranded in the Persian Gulf and throttled global supplies of fertilizer, of which Iran is one of the largest exporters.

“The Iran war adds a volatile external pressure to an already fragile summit,” said Craig Singleton, China program senior director at the Foundation for Defense of Democracies. “Even if [Beijing] is better positioned than most countries to absorb short-term shocks, I think Beijing wants the Strait of Hormuz reopened and the shipping flow stabilized because China’s export economy depends on predictable energy, transport and insurance conditions. The longer the conflict drags on, the more uncertainty gets priced into China’s trade model.”

Beijing has some leverage with Iran to end the Iran war but has rebuffed requests from Mr. Trump to join the effort to reopen the strait. It has told its domestic oil refineries to ignore U.S. sanctions on processing Iranian crude and threatened punishment for refiners that comply with the American sanctions.

Mr. Trump said Monday that what remains of a ceasefire with Iran is “on life support” after Tehran sent an “unacceptable” proposal to end the war.

Mr. Trump is expected to press Beijing on its financial support for and possible weapons exports to Iran. The State Department has sanctioned four Chinese entities for providing satellite imagery “that enables Iran’s military strikes against U.S. forces in the Middle East.”

Last week, China hosted Iran’s foreign minister in an effort to position itself as the key mediator to end the conflict. It also underscored Beijing’s desire for regional stability to boost the Chinese economy.

Still, Beijing has had its own issues with Tehran. Iran recently set fire to a Chinese-owned oil tanker in the Strait of Hormuz. China said it was “deeply concerned” about the situation and raised it during a meeting last week with Iranian Foreign Minister Abbas Araghchi.

“This is interesting that China is meeting with the Iranians before meeting with Trump,” said Bonny Lin, director of the China Power Project and senior adviser at the Center for Strategic and International Studies.

“On one hand, it showcases support to Iran that China is going to provide support to Iran prior to meeting with Trump,” Ms. Lin said. “On the other hand, I think it also sets China up in a strong position before it talks to President Trump, understanding what Iran wants and what Iran is not willing to do.”

White House officials say the closure of the Strait of Hormuz and Iran’s rebuff of peace proposals will be resolved once Mr. Trump and Mr. Xi start discussing trade issues and other items at the top of their agenda.

Mr. Trump began his second term seeking to rebalance trade relations with China through muscular use of tariffs. However, the Supreme Court has constrained the president’s tariff power.

“President Trump will continue doing what he has done over the past year: rebalancing the relationship with China and prioritizing reciprocity and fairness to restore American economic independence,” White House principal deputy press secretary Anna Kelly told reporters on a conference call to preview the Trump-Xi meeting. “The American people can expect the president to deliver more good deals on behalf of our country.”

Ms. Kelly emphasized that the two sides would focus on establishing a board of trade to oversee exchanges of goods between Washington and Beijing that are unrelated to national security.

The trade discussions will center on Chinese purchases of American agricultural products, U.S. energy and aerospace technology, including Boeing aircraft.

Ms. Lin said Beijing has some leverage to extract a trade deal with the U.S. but Mr. Trump will not reduce his demands on China to score a trade win.

“I don’t think the Chinese are going into this meeting thinking that if they can give President Trump a significant investment deal, that President Trump is going to trade Taiwan for that,” Ms. Lin said.

“Yes, President Trump did go in with some economic priorities, but there are also Iran priorities, and then the Chinese also want to bring in Taiwan. But these three issues are not necessarily tradable,” Ms. Lin said. “It’s not like, for example, if we have a really good trade or investment deal that the Iran issue will somehow also be linked on to.”

In December, Mr. Trump authorized an $11 billion arms package for Taiwan but has not moved forward with delivering it. Mr. Trump has griped that Taiwan has ripped off America’s semiconductor business and called on the island to pay the U.S. for protection.

Beijing has warned the U.S. against shipping arms to Taiwan, which it considers Chinese territory, and has asked the Trump administration to declare its opposition to Taiwan independence.

A senior Taiwanese official expressed concern last month that the country would be put “on the menu” during the Trump-Xi talks, with either leader seeking concessions in another area.

Mr. Trump will arrive in Beijing on Wednesday and leave Friday, giving the two leaders two days of deal-making. The schedule includes a welcoming ceremony Thursday, followed by a meeting with Mr. Xi, a tour of the Temple of Heaven, a state banquet and a working lunch before Mr. Trump departs China.