How Iran and Venezuela Attacks Will Transform Trump-Xi Trade Talks

China’s opposition to US and Israeli war on Iran is fueling tensions between Beijing and Washington, just weeks before a high-level meeting between Presidents Donald Trump and Xi Jinping.

The attack in the Middle East, which killed China-friendly Ayatollah Ali Khamenei and other Iranian officials, shows the US is doubling down on its willingness to abandon diplomacy and launch high-risk military operations in pursuit of its global goals. The war began two months after the US invaded Venezuela to capture the country’s president, Nicolás Maduro, who is now in custody in New York City, and his wife.

Even as the tumultuous trade war between the US and China settles into an uneasy stalemate, the moves show the Trump administration is willing to rock the boat in countries where Beijing wields significant influence.

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

The speed and show of force in Maduro’s attack was “nothing short of spectacular” and served as a reminder to China of US military capabilities, Keeler said in a phone interview.

If the Iranian aggression takes shape like the one in Venezuela, “then it could end up being a significant change in the nature of the background music of the meeting,” he said.

That could affect the negotiations and any agreements that come out of them, experts say. And while some think the U.S. strikes could give Trump some leverage with Xi, they note that they could favor China depending on how the days-old war evolves.

Trump is expected to travel to China from March 31 to April 2. Earlier, top US and Chinese trade officials, including Treasury Secretary Scott Besant and Chinese Vice Premier He Leifeng, are expected to meet in Paris to discuss tariffs on US soybeans and possible deals. Boeing plane, Bloomberg reported this week.

The US and Israel launched a bombing campaign against Iran on Saturday with airstrikes, Trump initially identified regime change in Tehran as a key goal.

In the days since, the administration’s explanations for both the timing and broader objectives of the strikes have morphed. Officials ultimately assembled a four-pronged justification for war: to destroy Iran’s missile program, cripple its navy, prevent it from acquiring nuclear weapons, and ensure it no longer supports militants beyond its borders.

Markets have been churning in response to the fighting, which has severely disrupted shipping through the Strait of Hormuz, a critical energy corridor.

China, the world’s biggest customer of Iran’s oil exports, has come out against the war and called for an immediate ceasefire.

“The Strait of Hormuz and its adjacent waters are an important international trade route for goods and energy. It serves the general interests of the international community to keep the region safe and stable,” Liu Pengyu, a spokesman for the Chinese Embassy in Washington, said in a statement to CNBC on Thursday.

“China urges relevant parties to immediately stop military operations, avoid further escalation of the tense situation, and prevent regional turmoil that will cause further damage to global economic growth,” Liu said.

International oil prices, which have fallen from recent peaks, have rebounded due to supply disruptions, including a sudden jump in US gas prices, which have created visible ripples in the global economy.

But China and other Asian economies, which receive much of the crude oil shipped through the Strait of Hormuz, face greater exposure.

Bessant suggested on CNBC Wednesday that developments in Venezuela and Iran are poised to do more damage to Beijing.

“China is very weak on the energy side,” he told “Squawk Box,” adding that the Asian economy is “paying a huge discount.”

“That’s obviously on hold for now, and then we’ll go from there,” Besant said.

Some analysts say the war could boost Trump’s position — for now, at least — as China’s interest in maintaining dialogue with the U.S. outweighs its growing concerns about U.S. aggression.

“In the immediate term, the optics arguably favor Trump,” Jack Lee, an analyst at China Macro Group, told CNBC in an email.

“A US administration willing to strike and absorb the blowback may appear to come from a ‘position of strength,’ which may give Beijing some warning,” he said.

Lee noted that China’s tone in responding to US strikes has been “unusually” soft, especially compared to Maduro’s outright condemnation of the attack.

Yu Su, chief economist at the Economist Intelligence Unit, acknowledged that despite the growing risks and uncertainties, the war will not derail the Trump-Xi meeting.

Instead, it could be part of the negotiations, he said: “It is more important for China compared to the case of Venezuela. China is currently expanding its investments in the Middle East, so potential spillover effects need to be considered.”

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

However, the war could shape China’s response, Meil ​​added, by increasing Beijing’s incentive to “engage in a way that sets expectations to maintain stability in bilateral relations.”

Experts stress that the Iran war is still in its infancy and the dynamics could change wildly between now and the date of Trump’s overseas trip.

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

– of CNBC Eamon Javers contributed to this report.