Washington, Aug 4 (AP) US 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 US 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 US threat of a 100 per cent 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 signalling 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.

US 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 do not want to impede on their sovereignty, so they would like to pay a 100 per cent tariff," Bessent said.

On Thursday, he called the Chinese “tough” negotiators, but said China's pushback has not 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 per cent tariff. "Realising 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 US 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 US pressure.

"If the US 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 US will not 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 Centre for Strategic and International Studies in Washington, said Beijing is unlikely to change its posture when it sees inconsistencies in US foreign policy goals toward Russia and Iran, whereas Beijing's policy support for Moscow is consistent and clear. It is 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 US 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 cannot afford to walk away from the oil from Russia and Iran," he said. "It is 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 US Energy Information Administration estimates that roughly 80 per cent to 90 per cent of the oil exported by Iran went to China. The Chinese economy benefits from the more than one million (10 lakh) 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 US 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 per cent over the previous month to more than 1.3 million (13 lakh) barrels per day, according to the KSE Institute, an analytical centre at the Kyiv School of Economics.

This past week, Trump said the US will impose a 25 per cent tariff on goods from India, plus an additional import tax because of India's purchasing of Russian oil. India's Foreign Ministry said on 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 US needs "to get real about dealing with the financing of this war". (AP) RC