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Iran is on Edge. Deadly protests erupted last month when Iran's currency collapsed and prices soared, fueling public anger. The governments responded with mass arrests, internet blackouts, and lethal force to clamp down on public dissenters.
The death toll has now spiked to nearly two thousand people killed in the crackdown. The scale is really hard to judge from the outside, particularly in light of these Internet blackouts.
As the protests continued to simmer and the death toll mounts, US President Donald Trump has said more violence could trigger the US to take military action. The military is looking at it, and we're looking at some very strong options.
We'll make a determination.
President Trump says he has canceled talks with the Radiant officials amid a protest crackdown, telling Iranian citizens quote, help is on its way. One determination he's already made, threatening to slap a twenty five percent tariff on any country that's doing business with Iran. He made the surprise tariff announcement on True Social on Monday. Though Trump didn't specify who would be targeted, it was clear straight away that two of Asia's largest economies would be firmly in the crosshairs.
China is by far and away the biggest purchaser of Iranian oil. It buys about ninety percent of Iran's oil, and India maybe buys about a tenth of what China does in terms of total goods.
That's Daniel ten Kate, Bloomberg's executive editor of Government and Economics in Asia.
Trump could go in and say it's twenty five percent. There's all sorts of questions about what it means. But if it is twenty five percent on top of current rates, then you looking at blowing up the truth with China and also really setting back even further US relations with India, just as Trump says, their important strategically.
This is the Big Take Asia from Bloomberg News. I'm Wanha. Every week we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever shifting region. Today on the show, Trump's response to violence in Iran is another round of tariffs. What that means for two of Iran's top trading partners in Asia and how it could tip the balance of
power around the world dan. This latest news began, as it often does, with President Trump posting on true social on Monday. The President issued an ultimatum countries doing business with Iran risks paying twenty five percent tariffs on all goods sent to the US. Radley speaking, what does that entail? Who would that affect? You know which countries it would be? Hit? The hert ist there.
This is sort of a classic trup tariff threat if that's something we can use now, But it's like, take something very vague, kind of a bold round number, like twenty five percent. You know, he's used one hundred percent before. He's threatened the bricks countries. He's threatened them for very vague things, and nobody really knows what that means.
Doing business could mean a lot of different things.
So it's almost any country that has any sort of economic relationship would be at risk. When you look at trading partners, China, the UAE, Turkey, Iraq, the EU, India, Pakistan, Russia, Afghanistan, Oman, those are the top ten trading partners according to official data. So the big question with all these threats is how they're actually implemented, and we have not seen that yet.
We're still waiting for the actual paper to come where they put this in writing and they tell importers and exporters exactly what the tariff rate is going to be on whichever country.
None of this is happening in a vacuum. It seems that Trump is trying to do this to isolate Iran and force regime change. Possibly, if that's the case, is using tariffs as an economic weapon to do it the most effective way?
Well, that remains to be seen. I mean, I think tariffs are Trump's financial weapon of choice, I guess, is one way to put it. He's fresh off a big victory in Venezuela. There's a lot of calls, particularly in the US right now, saying that Trump is on this march for freedom around the world. He's changing the geopolitical map. He's gotten rid of one dictator in Venezuela.
Cuba might be next.
You have protests in Iran, why not try and nudge the regime out if you can, and add to Trump's sort of history making legacy, defining march for freedom here that they see going on globally. It's a lot more complicated than that. Obviously, you can threaten tariffs all you want, but right now, heading into the midterms, the big issue in the United States is still affordability, and that's where
Trump is the most vulnerable politically. So if you start raising tariffs again twenty five percent across the board on countries that do business with Iran China in particular, you're looking at probably higher costs that will be born out by US consumers and potential voters in the midterms.
And of course, on top of that, we're seeing that Trump's broad tariffs on China and the world, and whether he had the authority as president to impose them, are now the subject of a lawsuit that the Supreme Court could rule on in a matter of days. What rationale could Trump use that would make these tariffs legal and more likely to stick.
That's always a good question.
I mean, the Supreme Court is really ruling on whether the tariffs are some sort of emergency and so if they are ruled illegal, then that really limits the scope that Trump can use to impose tariffs for emergency reasons. Traditionally, you would have an investigation like a three oh one investigation or some trade investigation that then author allows for tariffs to be imposed. So we're seeing Trump take action on that front with different investigations and to steal and
all sorts of overcapacity issues and things like that. And these could be quite broad in how they're actually defined at the end of the day, but they're on much firmer legal footing than just issuing a bunch of tire threats through executive order. So that does beg the question of whether the falls into that category of whether he can do that.
I think Trump is going to push the limits no matter what.
He's not going to try and be bound by that, and he's going to try and do this and then just let it play out in the courts, which takes a long time anyway. So whether the Supreme Court decision will have any impact on what happens with these latest terror threats on the part of Iran, I don't think that will stop Trump from going ahead with it.
We here, of course, focus on Asia Pacific, but broadly speaking, why is what's happening in Iran so significant for the region that you and I cover every day.
It's impossible to look at this situation without looking at China, And of course a lot of Asian countries are oil importers, so anything that happens in the Middle East regarding the price of oil is going to affect countries throughout Asia, and China buys about ninety percent of Iran's oil, so that's the key country to look at right now. India maybe buys about a tenth of what China does in
terms of total goods. There are other goods at trade hands, including electronics and things like that, but ultimately the relationship hinges on oil.
And how important are those oil purchases to funding Iran right now?
The oil purchases is certainly a big source of money for the Iranian regime. So the US has done a good job, I guess if you could call it that in terms of preventing other countries from buying Iranian oil.
India's one of them.
Which stopped a lot of major purchases of that. So the impact of US efforts and sanctions over the years has been pretty effective in limiting who or which countries Iran can sell to. And so that's why it's limited to China, and a lot of that goes through a so called dark fleet where it's not even on the official books. So China is able to get around that by having a lot of so called teapot refineries, refineries with no real connections to the outside world, buying this
oil at a discount and processing it. And that's about ten to fifteen percent of the oil that China imports altogether.
Right now, what have we heard from China and India on this.
We have not heard too much. Of course, China always expresses calls for stability. They don't like to interfere in internal affairs of given countries, but they also don't want third parties stepping in, particularly the United States. Obviously everyone
is watching very closely. You have a regime that's been in place for four or five decades that if it collapses, then there's all sorts of questions about what that means for stability in the Middle East, for the price of oil, and then does that have any ramifications for the region
at large? Are there kind of ripple effects that maybe you're not even thinking about right now now that I'm sure leaders across the region, particularly China and India are kind of doing a risk assessment now and seeing where they might be vulnerable.
Trump's hardball over Iranian oil could squeeze China, but it could also boost Beijing's soft power that's coming up after the break. China is Iran's most important trading partner, with more than thirty two billion dollars in goods exchanged in twenty twenty four. That support of Tehran helps counter US influence in the Middle East. Meanwhile, India ranks as Iran's sixth biggest trading partner, behind several Middle Eastern countries and
the European Union. For Tehran, oil sales to these two Asian giants are vital to keeping the regime afloat, but for Beijing and New Delhi that discounted crude is far less crucial to their economies. Still, as Bloomberg's Daniel ten Kate points out, maintaining a steady flow of arranging oil remains important for both countries.
I mean, China is basically going through deflation, so I mean, I guess you could have an argument that they can absorb higher prices a lot easier than a place like India could. India also CPI is quite low at the moment, so from their perspective, you know, it's probably not the end of the world either to start paying a higher prices. They're always very politically sensitive to price moves and oil is one where everyone could feel it throughout the whole economy.
So even if the price goes up and you're used to paying a small amount, people notice the price increases right away, So they tend to have a higher outsized political impact. And so either way, if you're She or Mody, you don't like to see oil prices jumping or being volatile in any way, then even if you can absorb it to some.
Extent, is there any chance that China and India would actually preemptively stop purchasing oil from Iran to head off these tariffs, Well.
India's already cut off a lot of Iranian oil purchases, and they've already started reducing Russian purchases as well. So for India, yes, I mean they're suffering under these tariffs more acutely than China is at the moment. In China's case, it is unlikely. I think China doesn't like to bend to the US and has shown over the past year that it can withstand the sort of pressure from Trump because it has this trump card, so to speak of rare eer so and it can cut off the US
and it has played that very effectively last year. Something that brought Trump to the table, led to the truce that we saw, and the US still has no real replacement for these rarest and critical minerals, and they've shown that they could play hardball with the US and the rest of the world.
Frankly, so, yeah, I don't see.
China backing down on this, and I think they would rather take up the fight than be seen to back down.
Now. Last week on the show, we discussed how President Trump is using an expanded version of the Monroe Doctrine to undercut China's influence in Latin America. It's interesting that you talk about the world turning to China as a more reliable partner. How might this latest threat kind of further what Trump is trying to do in terms of undercutting China's influence in the world.
Over the past five years, during the Biden administration particular, they really tried to hammer home the fact that China was using economic coercion to get what it wants and squeeze allies and other countries around the world. Now you have a completely different scenario where Trump is just blatantly saying We're going to use economic coersion.
To get what we want.
So from a Chinese perspective, You're in this sort.
Of mightis right world.
And I think that was a lot of the fears that many countries had about China, that there were no global rules to constrain countries like China. Frankly, and now, if the situation were reversed and China was doing what Trump was doing now, the outrage even two years ago would have been off the charts.
And I guess, in some ways, does all of this position China to basically make that argument that it is a more reliable friend, a more reliable partner than the US's.
Yeah, I mean it comes down to reliability. And if you're dealing with Trump, you don't know if he's going to turn on you and demand something from you that's a core national interest. So China at the moment has or trade itself as an alternative of stability. It's talked about global rules a lot. It's allowed China to claim the moral high ground, whether you think it deserves it or not. China has been there to say, look, we
follow the UN Charter, we follow global rules. So China's response isn't to go and say, okay, Trump said a precedent where we can do anything we want, so we're going to go and take Taiwan. That's not the case, but the precedent is setting is that we're in a law of the jungle, might is right world, and in that type of world, China is very strong. But China for the moment is it's enhancing its credibility as a responsible partner in a lot of ways.
We're just weeks into twenty twenty six and the US has now attacked Venezuela, captured President Nicholas Maduro, and is now threatening to also intervene in Iran. Obviously, She and Mody are closely watching all of this. How might this be sitting with them?
Like, nobody likes instability, especially if you're running a country with more than a billion people, with both Modi and She are. I mean, there's a lot of moving parts in both economies and to have big time external shocks that could impact the price of oil is certainly a worry. And I think that's their main worry at the moment, is what are going to be the effects on the economy that could trickle into domestic politics and effects stability
one way or the other. I don't think they're necessarily worried that you'll see a contagion effect from the protests in Tehran to New Delhi or to Beijing. But certainly you're worried about the secondary economic effects, and you're worried about what the US will do.
For She and for Modi. Stability is the preference.
You want to make sure first of all that your domestics such is secure, that there's no protest or domestic unrest or fallout from any of these events that could affect your domestic political standing. And then you know, secondly to make sure that geopolitically you're not heard in any way.
And so I think that's kind of what they're watching for.
But are we going to see a change in strategy more broadly, No, I mean I think you do see China hosting a lot of leaders lately from Europe and particularly of Canada's leader going over soon.
So they're improving.
Ties with a lot of Middle powers, and a lot of middle powers are looking to.
China now is a hedge against the US.
So in a way, a lot of this is actually not bad for China on a grand scheme of things. It's sort of countries are looking to China as a counterbalance to the US and Trump, and China has shown that it can stand up to Trump. So if Trump does go after them again, China's going to have a lot of countries that are more sympathetic to China in any case, in viewing Trump more as the rogue actor, which is kind of a change of role in what we've seen over the past decade or so.
This is The Big Take Asia from Bloomberg News. I'm wanh to get more from The Big Take and unlimited access to all of Bloomberg dot Com, subscribe today at Bloomberg dot com slash podcast offer. If you liked the episode, make sure to subscribe and review The Big Take Asia wherever you listen to podcasts. It really helps people find the show. Thanks for listening, See you next time.