Decoding Trump’s Demand For China To Join His Proposed Hormuz Naval Coalition

Trump wants to throw Xi into a dilemma before his upcoming trip, which he threatened to delay if China doesn’t join the US’ coalition, but it’s still possible that Xi flips the tables on Trump somehow.

Trump called on China and several other countries over the weekend to join his proposed naval coalition for securing freedom of navigation through the Strait of Hormuz amidst the ongoing Third Gulf War. He then told the Financial Times the day after that “I think China should help too because China gets 90 per cent of its oil from the Straits [sic]…We’d like to know before [my trip to China at month’s end]. It’s [two weeks is] a long time. We may delay.” This enormously raises the stakes of his demand.

If China doesn’t comply and Trump’s trip is delayed, then the fragile Sino-US trade truce might not last, which could worsen the global economic uncertainty caused by the oil crisis. On the other hand, compliance would lend legitimacy to his proposed naval coalition and likely be seen by Iran as unfriendly. Iran already clarified that the strait is only closed to unfriendly countries, which presently doesn’t include China, and a proposal was also reportedly floated for China to begin paying for Iranian oil with yuan.

About that, 13.4% of the oil that China imported by sea last year came from Iran, while the Gulf Kingdoms (excluding Oman whose exports are from the Arabian Sea) and Iraq contributed around 35% of its imports for a total of approximately 48.4% -- or almost half – of its annual oil imports by sea transiting through the strait. To be sure, China also has strategic oil reserves estimated at 1.3 billion barrels, or enough for 3-4 months, and it’s making rapid progress on implementing its green energy agenda too.

Even so, this data proves that China is economically dependent on the resumption of regular oil imports through the strait, which this analysis here argues could be weaponized by the US via control of Iran’s resources and pressure on the Gulf Kingdoms to coerce China into a lopsided trade deal. The goal is to derail its superpower trajectory and then institutionalize its junior relationship to the US. Perpetuating the Third Gulf War and seizing Iranian vessels sending oil to China could advance this agenda as well.

If China subordinates itself to the US by lending legitimacy to his proposed Hormuz naval coalition and pledging to sign a lopsided trade deal during his visit, then Trump could de-escalate the conflict and thus restore the reliability of China’s regional oil imports. If Xi proudly defies his demand, however, then Trump could perpetuate the conflict (thus prolonging the Gulf Kingdoms’ drastically reduced oil exports to China), seize Iranian vessels sending oil to China, delay his trip, and then intensify their trade war.

The US is still China’s largest single trade partner despite China’s trade diversification since Trump 1.0’s trade war, and the US still wields huge economic and financial influence over many of China’s other trade partners, so a new Sino-US trade war coupled with drastically reduced oil imports could hit China hard. Moreover, in this scenario, Trump might reach a deal with Putin first that could further worsen China’s negotiating position vis-à-vis the US and then lead to more lopsided trade terms being demanded of it.

Trump’s demand for China to join his naval coalition is therefore meant to throw Xi into a dilemma. Xi is being pushed to either subordinate China to the US by lending credence to this coalition in exchange for US-controlled energy security ahead of formalizing their junior partnership during Trump’s trip by agreeing to a lopsided trade deal or fight another trade war with the US but in a worse position than before. The Chinese are brilliant strategists, however, so maybe they’ll devise a way out of this dilemma.