When Donald Trump welcomes Xi Jinping to Washington this week, much of the attention will naturally fall on tariffs.

I will be watching something else.

Iran.

Trump and Xi are due to meet at the White House on 24 September. Their immediate economic task is difficult enough. A fragile U.S.-China trade truce is due to expire in November, while disagreements over critical minerals and agricultural purchases remain unresolved.

But the Middle East has inserted another problem into the relationship.

Washington wants China to use its economic relationship with Iran in ways that support American efforts to pressure Tehran.

Beijing has its own reasons to want stability.

Trade and geopolitics are beginning to occupy the same room.

This Was Supposed to Be About Trade

Trump and Xi have spent much of the past two years trying to prevent economic confrontation from overwhelming the relationship.

The present arrangement emerged from a long sequence of tariff escalation and negotiation.

In 2025, Washington and Beijing imposed increasingly severe tariffs before eventually reaching a trade truce. That arrangement survived into 2026.

When Trump visited Beijing in May, the two governments tried to build something more durable.

The White House announced new U.S.-China Boards of Trade and Investment. China approved an initial purchase of 200 American-made Boeing aircraft and committed to purchases of at least $17 billion a year in American agricultural products during 2026, 2027 and 2028.

Rare earths remained important.

So did Iran.

According to the White House account of the May summit, Trump and Xi agreed that Iran should not possess a nuclear weapon. They also called for the Strait of Hormuz to reopen.

Four months later, neither trade nor Iran has disappeared.

Reuters reports that expectations for Thursday’s summit are relatively modest. One central question is whether the two presidents can keep their trade truce on track beyond November.

Then there is the Middle East.

Washington’s Iran Strategy Runs Through China

China is the principal destination for Iranian oil.

That makes the relationship important to Washington because petroleum exports provide Tehran with a major source of foreign revenue.

The U.S. Treasury estimated in April that China was purchasing approximately 90 percent of Iran’s oil exports, with independent Chinese refineries accounting for most of those imports.

These refiners are commonly called “teapots.”

Their importance has attracted Washington’s attention.

In April, the Treasury Department’s Office of Foreign Assets Control warned financial institutions about sanctions risks associated with Chinese independent refineries importing Iranian crude.

OFAC had already designated several such refineries.

One was Hengli Petrochemical’s Dalian refinery. Treasury accused it of purchasing billions of dollars’ worth of Iranian petroleum and receiving Iranian crude transported aboard sanctioned vessels.

Hengli disputed allegations that it had bought Iranian oil.

The disagreement illustrates the complexity of enforcing sanctions across an international commodity market.

Washington can impose sanctions.

Making Iranian oil disappear from global trade is considerably harder.

What American Sanctions Actually Mean

The legal distinction matters.

It would be misleading to say that every Chinese purchase of Iranian petroleum is simply illegal everywhere.

U.S. sanctions operate through American statutes, executive orders and regulations.

Transactions involving sanctioned persons can be prohibited when they fall within U.S. jurisdiction. Foreign companies can also expose themselves to American secondary sanctions through certain dealings with sanctioned Iranian entities or sectors.

The consequences can be severe.

A foreign financial institution engaging in specified sanctionable transactions may face restrictions on its ability to maintain correspondent or payable-through accounts in the United States.

For an international bank, access to the American financial system matters enormously.

I know from banking that a cross-border transaction is rarely just a relationship between a buyer and seller.

Banks matter.

Currencies matter too.

So do correspondent relationships.

That is why sanctions can reach much farther than the territorial borders of the country imposing them.

The Trump administration has intensified that pressure.

Treasury’s current campaign against Iran warns foreign institutions that facilitating sanctions evasion can expose them to exclusion from the U.S. financial system.

China therefore sits directly inside one of Washington’s hardest enforcement problems.

Washington Has Already Put Iran Into the China Conversation

We do not have to guess whether the two issues are connected.

Treasury Secretary Scott Bessent said last week that Trump and Xi would continue discussions concerning Iran and China’s financial relationship with Tehran.

Bessent and Chinese Vice Premier He Lifeng then met in New York ahead of the presidential summit.

Their talks concentrated heavily on trade and artificial intelligence. Washington proposed a new mechanism for discussing AI-related national-security risks.

Other economic disputes remain unfinished.

Critical-mineral flows continue to concern American officials. Agricultural commitments have not disappeared either.

The picture is therefore more complicated than a simple bargain over Iranian oil.

Trump and Xi arrive with a crowded agenda.

Iran has become part of it.

China Does Not Want an Uncontrolled Middle East Crisis Either

China’s interests should not be confused with Iran’s.

Beijing maintains close relations with Tehran, but China also depends heavily on international energy markets and maritime trade.

Disruption around the Strait of Hormuz therefore creates its own problems for Beijing.

Chinese diplomacy this month makes that clear.

On 16 September, Foreign Minister Wang Yi met Iranian Foreign Minister Abbas Araghchi in Beijing.

Wang called on Iran and the United States to exercise restraint and return to substantive negotiations. He also called for the Strait of Hormuz to reopen as soon as possible because of its importance to international energy transportation and supply chains.

China was talking to Tehran.

But another conversation was taking place across the Gulf.

Reuters reported that Beijing privately asked Iran to help restrain Yemen’s Houthis after Saudi Arabia appealed to China for assistance.

The report matters because it reveals something about China’s changing position in the Middle East.

Iran regards China as an important strategic partner.

Saudi Arabia also sees value in talking to Beijing when regional security deteriorates.

China has relationships across a divide that Washington increasingly struggles to navigate.

Influence Is Not Control

There is a danger in taking the argument too far.

Buying Iranian oil does not give Xi Jinping command over Iranian policy.

Diplomatic access does not produce obedience either.

Iran has its own security interests and domestic political calculations.

The same caution applies to the Houthis.

Iran’s relationship with the movement gives Tehran influence, but influence should not automatically be treated as operational control.

China therefore possesses channels Washington considers useful.

What those channels can actually deliver is another question.

Beijing has publicly advocated negotiation rather than joining Washington’s pressure campaign on American terms.

Its interests overlap with those of the United States in some places.

They diverge sharply elsewhere.

The Real Constraint Is Interdependence

This is where the summit becomes more interesting than another tariff negotiation.

Washington wants to increase economic pressure on Tehran.

Some important Iranian commercial relationships lead into China.

At the same time, the United States is negotiating with Beijing over trade and other unresolved economic questions.

China faces its own constraints.

It benefits from Iranian oil but also depends on stable energy markets. Disruption around Hormuz threatens shipping and raises costs far beyond Iran.

Neither government approaches the summit with only one problem to solve.

A decision taken over Iran can affect the economic relationship.

A decision over trade can alter the political atmosphere surrounding cooperation on Iran.

That is not Chinese control over Washington.

Nor is it American control over Beijing.

It is interdependence between competing powers.

Taiwan Makes the Room More Crowded

Taiwan adds another layer.

Beijing considers Taiwan a core national interest, while Washington continues to maintain extensive political and security relations with Taipei under its existing legal framework.

Reuters reports that Taiwan is expected to feature in the Washington discussions.

Trump has publicly described a pending arms package for Taiwan as a negotiating chip.

That has generated concern in Taipei and Tokyo about how Taiwan might figure in broader negotiations with Beijing.

There is no evidence that Trump has agreed to exchange a Taiwan concession for Chinese action over Iran.

That distinction must remain clear.

What we can say is that several strategically important questions now sit inside the same bilateral relationship.

Trade is one.

Iran is another.

Taiwan carries consequences far beyond economics.

Presidential diplomacy can cause those separate files to interact even when no formal trade-off occurs.

Pakistan Has Reasons to Watch

From Karachi, the summit looks different.

Pakistan cannot view a Trump-Xi meeting simply as another episode in the U.S.-China trade dispute.

China is Pakistan’s largest trading partner and a major strategic partner.

Pakistan also shares a border with Iran.

Instability around the Gulf can reach Pakistan through shipping and energy costs long before most people think of it as a domestic economic problem.

There is a diplomatic connection as well.

On 31 March, China and Pakistan issued a joint Five-Point Initiative for Restoring Peace and Stability in the Gulf and Middle East Region.

The two governments called for an immediate cessation of hostilities and the start of peace talks.

They also called for safe commercial passage through the Strait of Hormuz and placed their initiative within the framework of the UN Charter and international law.

That document deserves more attention in Pakistan than it received.

Islamabad and Beijing were not merely commenting on the conflict.

They were placing themselves publicly behind a diplomatic framework for ending it.

If Washington now wants Beijing to play a larger role with Tehran, Pakistan should watch how China’s diplomatic position develops.

We sit next door to one of the countries at the centre of the dispute.

The Summit Is Really About the Limits of Economic Power

For years, Washington has tried to reduce strategic dependence on China.

Technology restrictions became one instrument.

Supply-chain diversification became another.

Beijing responded by trying to strengthen its own economic resilience.

Yet Iran exposes the limits of separation.

The United States can impose formidable financial pressure and still confront transactions outside its direct jurisdiction.

China can buy Iranian oil while remaining vulnerable to instability in the waterways through which global energy moves.

Iran can resist American pressure while depending heavily on external buyers for petroleum revenue.

That is why I will watch the Trump-Xi meeting from Karachi with Iran in mind.

The television pictures will show two presidents discussing the world’s largest bilateral economic relationship.

Behind those pictures sits another negotiation.

Oil tankers matter.

So do banks.

Somewhere between an Iranian barrel entering a Chinese refinery and an American Treasury official considering another sanctions designation, economic policy becomes foreign policy.

That is the part of Thursday’s summit worth watching.