WASHINGTON – U.S. and Chinese officials may be able to settle many of their differences to reach a trade deal and avert punishing tariffs, but they remain far apart on one issue: the U.S. demand that China stop purchasing oil from Iran and Russia.

“China will always ensure its energy supply in ways that serve our national interests,” China’s Foreign Ministry posted on X on Wednesday following two days of trade negotiations in Stockholm, responding to the U.S. threat of a 100% tariff.

“Coercion and pressuring will not achieve anything. China will firmly defend its sovereignty, security and development interests,” the ministry said.

The response is notable at a time when both Beijing and Washington are signaling optimism and goodwill about reaching a deal to keep commercial ties between the world’s two largest economies stable — after climbing down from sky-high tariffs and harsh trade restrictions. It underscores China’s confidence in playing hardball when dealing with the Trump administration, especially when trade is linked to its energy and foreign policies.

U.S. Treasury Secretary Scott Bessent, emerging from the talks, told reporters that when it comes to Russian oil purchases, the “Chinese take their sovereignty very seriously.”

“We don’t want to impede on their sovereignty, so they would like to pay a 100% tariff,” Bessent said.

On Thursday, he called the Chinese “tough” negotiators, but said China’s pushback hasn’t stalled the negotiations. “I believe that we have the makings of a deal,” Bessent told CNBC.

Gabriel Wildau, managing director of the consultancy Teneo, said he doubts President Donald Trump would actually deploy the 100% tariff. “Realizing those threats would derail all the recent progress and probably kill any chance” for Trump and Chinese President Xi Jinping to announce a trade deal if they should meet this fall, Wildau said.

In seeking to restrict oil sales by Russia and Iran, a major source of revenue for both countries, the U.S. wants to reduce the funding available for their militaries, as Moscow pursues its war against Ukraine and Tehran funds militant groups across the Middle East.

China plays hardball

When Trump unveiled a sweeping plan for tariffs on dozens of countries in April, China was the only country that retaliated. It refused to give in to U.S. pressure.

“If the U.S. is bent on imposing tariffs, China will fight to the end, and this is China’s consistent official stance,” said Tu Xinquan, director of the China Institute for WTO Studies at the University of International Business and Economics in Beijing. WTO is the acronym for the World Trade Organization.

Negotiating tactics aside, China may also suspect that the U.S. won’t follow through on its threat, questioning the importance Trump places on countering Russia, Tu said.

Scott Kennedy, senior adviser and trustee chair in Chinese Business and Economics at the Center for Strategic and International Studies in Washington, said Beijing is unlikely to change its posture when it sees inconsistencies in U.S. foreign policy goals toward Russia and Iran, whereas Beijing’s policy support for Moscow is consistent and clear. It’s also possible that Beijing may want to use it as another negotiating tool to extract more concessions from Trump, Kennedy said.

Danny Russel, a distinguished fellow at the Asia Society Policy Institute, said Beijing now sees itself as “the one holding the cards in its struggle with Washington.” He said Trump has made it clear he wants a “headline-grabbing deal” with Xi, “so rejecting a U.S. demand to stop buying oil from Iran or Russia is probably not seen as a deal‑breaker, even if it generates friction and a delay.”

Continuing to buy oil from Russia preserves Xi’s “strategic solidarity” with Russian President Vladimir Putin and significantly reduces the economic costs for China, Russel said.

“Beijing simply can’t afford to walk away from the oil from Russia and Iran,” he said. “It’s too important a strategic energy supply, and Beijing is buying it at fire‑sale prices.”

China depends on oil from Russia and Iran

A 2024 report by the U.S. Energy Information Administration estimates that roughly 80% to 90% of the oil exported by Iran went to China. The Chinese economy benefits from the more than 1 million barrels of Iranian oil it imports per day.

After the Iranian parliament floated a plan to shut down the Strait of Hormuz in June following U.S. strikes on Iran’s nuclear facilities, China spoke out against closing the critical oil transit route.

China also is an important customer for Russia, but is second to India in buying Russian seaborne crude oil exports. In April, Chinese imports of Russian oil rose 20% over the previous month to more than 1.3 million barrels per day, according to the KSE Institute, an analytical center at the Kyiv School of Economics.

This past week, Trump said the U.S. will impose a 25% tariff on goods from India, plus an additional import tax because of India’s purchasing of Russian oil. India’s Foreign Ministry said Friday its relationship with Russia was “steady and time-tested.”

Stephen Miller, White House deputy chief of staff and a top policy adviser, said Trump has been clear that it is “not acceptable” for India to continue financing the Ukraine war by purchasing oil from Russia.

“People will be shocked to learn that India is basically tied with China in purchasing Russian oil,” Miller said on Fox News Channel’s “Sunday Morning Futures.” He said the U.S. needs “to get real about dealing with the financing of this war.”

Congress demands action

Sen. Lindsey Graham, a Republican from South Carolina, is pushing for sanctions and tariffs on Russia and its financial backers. In April, he introduced a bill that would authorize the president to impose tariffs as high as 500% not only on Russia but on any country that “knowingly” buys oil, uranium, natural gas, petroleum products or petrochemical products from Russia.

“The purpose of this legislation is to break the cycle of China — a communist dictatorship — buying oil below market price from Putin’s Russia, which empowers his war machine to kill innocent Ukrainian civilians,” Graham said in a June statement.

The bill has 84 co-sponsors in the 100-seat Senate. A corresponding House version has been introduced, also with bipartisan support.

Republicans say they stand ready to move on the sanctions legislation if Trump asks them to do so, but the bill is on hold for now.

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Associated Press writers David McHugh in Frankfurt and Rajesh Roy in New Delhi and researcher Yu Bing in Beijing contributed to the report.