There’s a China-sized hole in the Trump administration’s plan to wage an “economic D-Day” against Iran. When US Treasury Secretary Scott Bessent announced new sanctions on Monday targeting a range of individuals and entities alleged to support Tehran, and threatened more to come, Beijing was conspicuously absent from the list.
China is Iran’s most important economic lifeline, and prior to the war, the two countries had a mutually beneficial oil arrangement: China bought nearly all the crude Iran managed to export at a significant discount, in exchange for ignoring Western sanctions. All told, Iranian oil provided about 12% of China’s imports.
“We are level-setting with every country to tell them our expectations,” Bessent said. This year the US did step up sanctions on one of China’s biggest refineries over its purchases of Iranian crude, and the American naval blockade in the Strait of Hormuz has for now effectively halted most Iranian crude exports. But with Chinese leader Xi Jinping due to meet with Trump in Washington next month, the administration is clearly aiming to avoid a full-on economic war with Beijing — and that puts its Iran strategy at risk.
“Only measures that materially sever Iran-China trade — including sanctions on Chinese banks, state-owned enterprises (SOEs) and economically critical ports/terminals — would accelerate Iran’s economic breaking point, and we do not expect Washington to go that far,” Rapidan Energy Group analysts wrote on Monday.
Still, there’s another strategy available, Sen. Bill Cassidy, R-La., told me this week: Pushing forward tariff legislation to crack down on China’s massive industrial overcapacity. Sanctioning Iranian oil effectively subsidizes the Chinese economy, Cassidy said, by creating a pool of cheap crude that only China is willing and able to snap up. Stronger trade barriers that prevent China from flooding US and global markets with underpriced manufactured goods would curb oil and gas demand inside China, he said, and that would mean less revenue for US adversaries like Iran and Russia.