China and Germany defend their business ties with Iran

China and Germany defended their business ties with Iran on Wednesday in the face of US president Donald Trump’s warning that any companies trading with the Islamic Republic would be barred from the United States.

The comments from Beijing and Berlin signalled growing anger from partners of the US – which reimposed strict sanctions against Iran on Tuesday – over its threat to penalise businesses from third countries that continue to operate there.

“China has consistently opposed unilateral sanctions and long-armed jurisdiction,” the Chinese foreign ministry said.

"China's commercial co-operation with Iran is open and transparent, reasonable, fair and lawful, not violating any United Nations Security Council resolutions," it added in a statement. "China's lawful rights should be protected."

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The German government said US sanctions against Iran that have an extra-territorial effect violate international law, and Germany expects Washington to consider European interests when coming up with such sanctions.

Global trade

The reimposition of US sanctions followed Mr Trump’s decision earlier this year to pull out of a 2015 deal to lift punitive measures in return for curbs on Iran’s nuclear programme designed to prevent it from building an atomic bomb.

The move brings a fresh complication to global trade where tensions are already high in light of tariff threats being swapped by the US and China.

On Wednesday, China’s commerce ministry responded in kind to the Trump administration’s latest trade threats, announcing plans to hit $16 billion (€13.8bn) worth of US goods with a 25 per cent tariff rate. The tariffs would be implemented on 333 products, and come in just after midnight on August 23rd, according to a statement from the Chinese ministry.

Among the US products to be targeted are coal and diesel, cars and bicycles, medical equipment and steel products.

The move mirrors the Trump administration’s decision to push ahead with plans to impose additional 25 per cent tariffs on $16 billion of annual imports from China later this month. This follows a first round of tariffs on $34 billion of imports that went into effect on July 6th.

Unsettle investors 

In further fallout from US policy, the Russian rouble fell to its lowest level against the dollar in nearly two years on Wednesday as concern over possible new US economic sanctions began to unsettle investors.

Stocks and bonds were also swept up in the worry, which came after the Russian newspaper Kommersant published the text of a new US sanctions bill – nearly a week after US senators introduced it.

"The direction of travel is pretty clear," said Maya Senussi at Oxford Economics. "There is no doubt that the US is intent on ratcheting up the pressure, and tightening the measures already imposed."

Separately on Wednesday, Saudi Arabia moved to sell Canadian assets as the kingdom escalated its response to Ottawa’s criticism of the arrest of a female activist.

The Saudi central bank and state pension funds instructed their overseas asset managers to dispose of their Canadian equities, bonds and cash holdings “no matter the cost”, two sources said. – Copyright The Financial Times Limited 2018/Reuters