The Middle East conflict’s trade impact has been felt far and wide, with China’s latest trade data indicating a significant slowdown in its export growth.
That setback shouldn’t daunt Chinese officials ahead of a US meeting in May. Beijing maintains a tight control over critical minerals that may give China an advantage in negotiations, as Washington seeks to replenish its weapons stock following its military campaign in Iran.
Progress towards a US-Iran peace deal continues to be mixed, although claims from US President Donald Trump that Tehran wishes to return to the negotiating table have sent Bent Crude prices below the US$100 mark.
Chinese export slowdown
The world’s biggest exporter could face a setback in March, as export growth is predicted to slump in the wake of the US-Iran war.
A Reuters poll of economists predicted China to have 8.6% growth in exports in March, a sharp drop from the 21.8% recorded in the first two months of the year. This raised doubts about China’s potential to surpass last year's record-breaking US$1.2trn surplus.
Experts have described the war as the first real test of the global AI investment boom of the past few years, connecting the reduction in Chinese export growth to diminished confidence in the AI sector amid surging energy prices.
China exports critical minerals essential to the manufacture of the semiconductor chips needed for AI, with the leading chip models developed in the US and produced in Taiwan, South Korea, Japan and China.
The technology is notoriously energy-intensive, with data centres used by AI tools estimated to consume 1.5% of the world’s electricity in 2024, according to the International Energy Agency’s (IEA) 2025 report.
Export control surge
Despite the slowdown in exports, China still appears to retain the upper hand in upcoming trade talks with US.
Politico reports that depleted military resources after US military action in Iran means the US will require a greater supply of Chinese critical minerals to replenish its weapons.
Former US Trade Representative (USTR) Wendy Cutler told the publication that Beijing could be “smelling leverage” in response to the US’ greater needs, and therefore prime to “up their demands”.
Incumbent USTR Jamieson Greer struck notably conciliatory tones at an event in Washington DC last week, telling attendees Trump would be striving to keep the relationship “stable” in May’s trip.
Gallium, in particular, is a vital input for the most advanced defence tech, including satellites solar cells, missile seekers, radars and secure radio frequency links.
China dominates the processing of gallium and has been prepared to restrict exports in the past, introducing special licensing requirements in 2023.
This reflects a wider trend in recent years, with Beijing significantly increasing its use of export controls, according to a report published by the EU Chamber of Commerce in China.
The report highlighted 30 different exports control announcements between 2021 and 2025 – almost triple the number announced in the preceding five years – and noted that 10 applied to critical minerals and rare earths.
New leaf in Hungary?
Hungary’s new centre-right prime minister Péter Magyar has suggested that he will facilitate the passage of EU financial support for Ukraine and approve further sanctions on Russia.
The passage of a €90bn loan to Ukraine and the implementation of the EU’s planned 20th round of sanctions were blocked earlier this year by Magyar’s euro-skeptic predecessor, Viktor Orbán.
Speaking at a press conference in Budapest, Politico reports that Magyar said the decision on the loan "was already made in December" – referring to EU leaders’ decision for 24 members to put forward funds for the loan. He added that his incoming administration "would like to be coherent" with that decision.
There’s hope in Brussels that Magyar’s victory will signal a new era of cooperation with Hungary, following his landslide election victory on Sunday (12 April).
Yesterday (13 April) European Commission (EC) President Ursula von der Leyen said that the EC will “start working with the government as soon as possible to make swift and overdue progress for the benefit of the Hungarian people”.
Magyar has vowed to restore democracy in Hungary, as well as relations with Brussels and Nato, following Orbán’s 16-year premiership, which saw economic standards slip and allegations of corruption rise.
After his victory, Magyar told supporters that Hungary would “once again” become a “strong ally” to both Nato and the EU.
Oil prices
Oil prices have dipped again following Trump’s claim that Tehran has reached out for further talks, after the weekend’s negotiations in Islamabad failed to yield a peace deal, and the president announced a naval blockade of the Strait of Hormuz.
Trump and his officials have previously made similar claims, some of which have been flatly denied by Iranian officials.
Brent crude fell 1% to US$98.40, from highs of over US$100 dollars per barrel after Sunday’s no-deal announcement.
Despite renewed hopes of deescalation, IEA director general Fatih Birol said that the worst may not be over yet, the BBC reports. Birol warned that many oil shipments would already have been loaded and in transit last month, cushioning consumers from the impact of March price hikes.
“The longer the disruption is, the more severe the problem becomes,” he said.
Birol also didn’t rule out a second release of the IEA’s strategic oil reserves, after all 32 members agreed to release 400 barrels last month to easy supply challenges.
“Four hundred million barrels is only 20% of our resource. We have still 80% in our pocket. We are assessing the decision. If and when we decide it is the time, we are ready to act and act immediately.”
Elsewhere in the headlines
- As the UK prepares legislation to put EU rules on the statute books as part of its alignment with Brussels on trade, the i shares polling suggesting the UK are supportive of closer trade ties with the EU, with 66% of voters in favour
- Amid surging oil prices, the production of a nuclear power plant in Anglesey has been given the go-ahead. The Wylfa site, to be built in partnership with Rolls Royce, should be able to power 3 million homes (over 10% of the UK’s total) for over 60 years
Yesterday in Trade
- UK government announced plan to add EU rules to statute book as part of relations ‘reset’ that includes alignment of key trade rules
- Look-ahead to Spring Meetings of key economic institutions: the World Bank and International Monetary Fund
You can read those stories and more here.
