Chinese Tire Manufacturer Gets Cold Feet With Iranian Project

China’s Shandong Linglong Tire Company (Linglong) is reportedly hesitant about going ahead with a previously announced contract to supply technology to a greenfield tire plant in southeastern Iran.

“They are asking for more time because of pressures by Trump,” an industry insider told the London-based European Rubber Journal.

The contract, estimated to be worth around €8-10 million, was awarded to Linglong late last year.

The deal would see the Chinese company supplying technology and engineering to the Arya Hamoon Tire production plant in Sistan-Baluchestan Province.

Linglong has been among the global top 20 tire enterprises and top five in China for many years.

Trump, a fierce critic of the nuclear deal Iran signed with world powers in 2015, has threatened not to extend US sanctions relief on Iran related to the agreement that sees the West lifting extensive sanctions in exchange for the Islamic Republic curbing its nuclear program, according to Reuters.

Linglong’s hesitation comes as the US Department of Commerce has banned American companies from selling components to Chinese telecom equipment maker ZTE Corp for seven years after breaking an agreement reached after it was caught illegally shipping goods to Iran, US officials said on Monday.

The US action, first reported by Reuters, could be devastating to ZTE since American companies are estimated to provide 25-30% of the components used in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.

China responded swiftly, warning it is prepared to take action to protect the interests of Chinese firms and saying it hopes the United States can deal with the issue in accordance with the law.

The Chinese company, which sells smartphones in the United States, paid $890 million in fines and penalties, with an additional penalty of $300 million that could be imposed.

The move comes at a time when China and the US have threatened each other with tens of billions of dollars in tariffs in recent weeks, fanning worries of a full blown trade war that threatens global supply chains as well as business investment plans.