President Donald Trump arrives in Beijing tomorrow for a summit with Chinese President Xi Jinping that analysts at the Council on Foreign Relations describe as arriving with China holding the positional advantage. The meeting was originally scheduled for March before being delayed by the Iran war. It now arrives at the intersection of three files — all of which carry direct implications for Canadian portfolios — simultaneously active: the Iran ceasefire and Hormuz reopening, the CUSMA joint review, and the broader U.S.-China technology and critical minerals dispute.
The Trump-Xi summit is the single geopolitical event with the greatest near-term influence on oil prices. Brent crude is trading at approximately $107 today, roughly $17 above the Bank of Canada's Q2 assumption of $90 as of the April 29 MPR. The gap between where oil trades and where the BoC assumed it would trade is the central variable in the June 10 rate decision. The summit is the only mechanism through which that gap could close quickly.
Why China Is the Hormuz Variable
The chain of consequence is not complicated, but it is poorly understood in the context of Canadian portfolios. China purchases more than 80% of Iran's shipped crude exports, according to Al Jazeera and CNBC reporting on the summit briefings. Iran's leverage in the Strait of Hormuz — and its willingness to keep the strait effectively closed while the ceasefire nominally holds — depends partly on its ability to continue selling oil. China's willingness to condition those purchases, or to exert diplomatic pressure in Tehran, is the lever Washington is asking Beijing to pull. Trump said Monday he would raise Iran specifically with Xi. Iranian officials met with their Chinese counterparts in Beijing last week, days before Trump's arrival. Whether Xi uses that proximity is the central uncertainty of the summit.
The chart above shows Brent crude's price trajectory since the February 28 strikes, alongside the key diplomatic milestones and the BoC's baseline oil price assumption, illustrating the gap the summit is positioned to close or widen.
Brent's April 8 ceasefire plunge and partial recovery reflects the market's repeated re-pricing of a settlement that has not materialized. The $17 gap between current prices and the Bank of Canada's Q2 baseline assumption represents the direct stakes for Canadian monetary policy of the Trump-Xi summit outcome.
CUSMA, Energy, and the Leverage Canada Is Playing
The summit's second major Canadian consequence runs through the CUSMA review timeline. U.S. Trade Representative Jamieson Greer must report to Congress by June 1 on whether the U.S. intends to extend CUSMA or pursue changes. The formal July 1 trilateral review follows. Canada's Energy and Natural Resources Minister Tim Hodgson has been explicit that energy is Ottawa's primary bargaining chip: Canadian energy exports to the U.S. totalled $178 billion in 2024, including $152 billion in crude oil, and Alberta alone supplies approximately half of all U.S. crude imports. Any U.S. tariff on Canadian crude would, according to TD Bank analysis, immediately raise U.S. gasoline prices by $0.30-0.70 per gallon.
The Trump-Xi summit intersects the CUSMA review through the Iran file. Steve Verheul, Canada's former chief trade negotiator, noted in analysis published by RBC that the Iran war has strained U.S. supply chains across energy, aluminium, and fertilizers — commodities Canada supplies — giving Ottawa some leverage in trade talks. If the summit produces a credible Chinese commitment to pressure Iran, oil prices fall and Canada's energy leverage in CUSMA talks is partially eroded. If the summit fails, oil prices stay elevated, Canada's energy positioning strengthens, but the Bank of Canada's rate path becomes more complicated. The two outcomes point in opposite directions for different Canadian portfolio exposures.
Two Scenarios, Two Canadian Portfolio Reads
The base case, held by most analysts including those at Charles Schwab and CFR, is that the summit produces diplomatic language but no concrete Hormuz commitment from China. Xi is Iran's largest customer and Iran is selling oil at a discount that benefits Beijing. The incentive to actively pressure Tehran is limited. In this scenario, Brent stays elevated, the BoC's June 10 hold consensus remains intact but fragile, Canadian energy stocks extend their gains, and CUSMA negotiations continue with energy as Ottawa's central lever.
The tail scenario is a credible Chinese reduction of Iranian oil purchases, possibly tied to a broader trade concession from Washington on semiconductors or rare earths. In that scenario, Tehran faces economic pressure to negotiate, Hormuz reopens on a meaningful timetable, Brent moves toward $90 or below, the BoC's April 29 inflation forecast becomes achievable again, and Canadian energy stocks face a sharp reversal of the same magnitude that built their current gains. The 2022 analog — Suncor up 45% then down 30% — is the reference point.