Barter trade activities between Chinese automotive giant Chery Automobile and Iran have risen amid U.S. Sanctions on the country by President Donald Trump.
Cars Paid For In Metal Instead Of Cash
As Trump escalated sanctions on Iran after abandoning the Iran Nuclear Deal in 2018, a barter trade began between Chery and Iran as the country's access to the global financial system became restricted, Bloomberg reported on Monday.
The trade lets Chery, which is the largest exporter of vehicles in China, supply semi-knocked-down vehicles to Iran, which accounted for more than half of Chery's exports by 2016, in exchange for access to Iranian metal ores, the report suggests.
Chery doesn't barter vehicles directly to Iran; instead, it routes trade activities through a separate company by supplying vehicles to the company, which then supplies the knocked-down vehicles to Chery's local partner in Iran, MVM, to assemble.
In return, Iran supplies metal ores like Copper and Zinc to Tongling Nonferrous Metals Group Holdings, a state-owned metal company that distributes them to other companies in China.
As Chery isn't trading in U.S. dollars, it isn't violating sanctions imposed by Trump on Iran. "US and European sanctions on Iran apply specifically to individuals and companies from those countries and anyone using their currencies," the report said.
Criticism Of Trump Over Iran Sanctions
The news comes as Trump has been criticized by Sen. Chuck Schumer (D-N.Y.) over what he called "TACO Trump"-- TACO refers to a Wall Street trading term translating to Trump Always Chickens Out -- and his side deals with Tehran.
"They're gonna sound tough in public and then and then have a side deal that lets Iran get away with everything? That's outrageous," he said. Meanwhile, Trump denied letting Iran refine Uranium.
Trump had, in May, demonstrated a significant diplomatic gesture towards Iran in the hopes of improved relations between Washington, DC and Tehran. "As I have shown repeatedly, I am willing to end past conflicts and forge new partnerships for a better and more stable world," Trump said.
Chery's Hong Kong IPO, Other HK-Listed Companies
Meanwhile, Chery's IPO on the Hong Kong stock exchange helped the company raise $1.2 billion and saw its share price surge 11% to HK$34.16. The initial share price at the IPO debut was HK$30.75.
Contemporary Amperex Technology Co. Ltd. (CATL), which supplies EV batteries to companies like General Motors Co. (NYSE:GM), raised over $4.6 billion and surged 12.5% to HK$296 after its Hong Kong debut. The initial price of its shares was HK$263 in May.
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