In a significant diplomatic development, former U.S. President Donald Trump revealed in a Fox Business interview that he and Chinese President Xi Jinping have exchanged letters concerning allegations of Chinese weapons transfers to Iran. Trump stated he wrote to Xi asking China not to supply weapons to Iran, to which Xi responded with a written denial, asserting that China is not engaged in such activity.
The exchange carries substantial weight as it follows Trump's prior threat to impose a 50% tariff on goods from any country arming Iran—a warning directly aimed at China, one of Tehran's closest economic partners. While U.S. intelligence has not confirmed evidence of Chinese missiles being used, concerns persist over Beijing's supply of dual-use technology to Iran's military programs.
This diplomatic communication comes amidst a prolonged disruption in the Strait of Hormuz, a critical global oil chokepoint. Iran's Revolutionary Guards declared the strait closed roughly 45 days ago, cutting off around 20% of global oil and liquefied natural gas shipments. Although a two-week ceasefire is now in place, daily vessel crossings remain a fraction of the pre-conflict norm of over 130.
Trump claimed on his Truth Social platform that he is "permanently opening" the strait and that China is "very happy" about it. Concurrently, the U.S. has enacted a naval blockade of Iranian ports, which the U.S. military says has completely halted all sea trade in and out of the country. Peace talks between the U.S. and Iran ended over the weekend without agreement, though Trump suggested they could resume soon.
The letters set the stage for a planned Trump-Xi summit in Beijing on May 14-15. Trump indicated the Iran situation would not affect the meeting, stating, "I don't think it does. I mean, he's somebody that needs oil. We don't." Xi made his first public comments on the conflict on Tuesday, telling the Spanish Prime Minister that "the international order is crumbling into disarray" and calling for restraint.
Market analysts have linked these geopolitical developments directly to cryptocurrency prices, particularly Bitcoin. BTC has shown acute sensitivity to diplomatic signals, rallying on hints of de-escalation and falling on announcements of heightened tensions like the naval blockade. A credible path toward U.S.-China cooperation is seen as potentially easing oil-driven inflation pressures, which have kept the Federal Reserve hawkish and weighed on risk assets like crypto since February.
