President Trump disclosed Wednesday that he and Chinese President Xi Jinping exchanged letters over China’s alleged weapons transfers to Iran, with Xi denying the claim in writing and Trump calling it a positive step ahead of their May summit.

President Trump told Fox Business Wednesday morning that Chinese President Xi Jinping sent him a letter denying that China is supplying weapons to Iran. Trump said he initiated the exchange after US intelligence reports surfaced suggesting Beijing may have sent a shipment of missiles to Tehran. “I wrote him a letter asking him not to do that, and he wrote me a letter saying, essentially, he’s not doing that,” Trump said.

In a follow-up Truth Social post, Trump wrote that China had “agreed not to send weapons to Iran” and said he and Xi were “working together smartly, and very well.” The post also stated that China was “very happy” the US was moving to reopen the Strait of Hormuz, through which China sources a significant portion of its energy imports.

What the Letters Say and Why It Matters

The exchange carries diplomatic weight even without formal verification. Trump last week threatened a 50% tariff on any country supplying Iran with weapons, a warning aimed squarely at China. Xi’s written denial, whether or not it reflects Beijing’s actual behavior, gives Trump a face-saving path to de-escalate one front of the conflict without confrontation.

US intelligence has not confirmed definitive evidence that Chinese missiles have been used against American or Israeli forces. Chinese companies have, however, provided dual-use components tied to Iran’s missile and drone programs, a distinction analysts say matters significantly for what Xi’s letter does and does not commit to.

Trump and Xi are scheduled to meet in Beijing on May 14 and 15, and Trump said the Iran situation would not affect that meeting.

How China Fits Into the Iran Standoff

China is the primary buyer of Iranian crude oil and has the most to lose economically from a prolonged Strait of Hormuz closure. As the largest non-Western power with influence over Tehran, Beijing’s posture toward the conflict has been closely watched by both markets and diplomatic circles. Xi’s first public comments on the war came Tuesday, when he told Spain’s prime minister that “the international order is crumbling into disarray.”

The letter exchange suggests a backchannel is open between Washington and Beijing at a moment when the two countries are also navigating trade tensions, with tariff negotiations expected to feature prominently at next month’s summit.

What It Means for Bitcoin and Crypto Markets

Bitcoin has been acutely sensitive to every diplomatic signal in the Iran conflict. BTC rallied 5% to $74,400 on Trump comments suggesting Iran wanted to return to talks, and dropped to a session low of $70,617 when the naval blockade was announced and oil spiked to $105. Each diplomatic signal has produced an immediate repricing, amplified by the heavy short positioning that has built up over 46 consecutive days of extreme fear.

A credible path toward US-China cooperation on Iran, even without a formal ceasefire, would ease the oil-driven inflation pressure that has kept the Federal Reserve hawkish and risk assets on the back foot since February. Market analyst Sam Daodu has outlined a $75,000 to $80,000 range for BTC if new talks produce even a temporary agreement, and a path toward $100,000 by year-end if a full deal materialises.