US threatens to sever Iran’s last economic lifelines, putting China in the crosshairs

WASHINGTON, 24 AUGUST 2026 —

US Threat of ‘Economic D-Day’ for Iran Tests Trump’s China Detente

KUALA LUMPUR, Aug 24 (Reuters/Bloomberg) — The Trump administration’s vow to sever every economic lifeline sustaining Iran risks drawing China, Tehran’s top trade partner, into the crosshairs of US sanctions—a move that could provoke severe retaliation from Beijing and test the limits of Washington’s economic warfare.

US officials have framed the campaign as the toughest sanctions regime ever, with Treasury Secretary Scott Bessent warning in a Financial Times op-ed on Sunday that countries considering defiance of Washington should not “discount the cost of testing” US resolve. Bessent, scheduled to unveil the measures in a 17:00 GMT press conference, has vowed to leverage “every agency, every authority and action many assumed we would never summon.”

Analysts say the administration’s willingness to target China will signal its commitment to a prolonged economic offensive. Brett Erickson, sanctions expert and managing principal of Obsidian Risk Advisors, told Al Jazeera that deliberately degrading US-China ties would indicate Washington’s intent to wage a sustained campaign against Tehran.

“That is not a relationship you degrade lightly,” Erickson said. “If the United States decides to really bring China into the ring, it will be a serious indication that the United States plans to wage this economic war for a prolonged period of time. If they do not, it will be a tacit admission from the Trump administration that they do not believe economic hardship can seriously bring about a change in the Iranian position.”

China’s economic ties with Iran are extensive. According to the US-China Economic and Security Review Commission, two-way trade reached $9.96 billion in 2025, excluding an estimated $31.2 billion in Iranian oil shipments. The US Treasury Department estimates that China accounts for about 90 percent of Iran’s oil sales, making Beijing a critical lifeline for Tehran’s economy.

To date, the Trump administration has targeted only a handful of minor China-based entities. In April, the US sanctioned Hengli Petrochemical (Dalian) Refinery, one of China’s largest independent refineries, over alleged purchases of Iranian oil. Additional measures were imposed in May on four Hong Kong firms and in August on six China- and Hong Kong-based shipping lines.

, Washington has yet to sanction major Chinese financial institutions, widely seen as key nodes in Iran’s oil trade.

Jennifer Kavanagh, senior fellow at the Washington-based foreign policy think tank Defense Priorities, told Al Jazeera that cutting off China would be essential to any successful pressure campaign—but unlikely to happen.

“Cutting off Chinese economic ties will be key to the success of any attempt to increase pressure on Iran. However, the United States won’t do it,” she said. “If it does, China will retaliate and has the leverage to impose costs on the US.”

China has consistently opposed US sanctions against Iran, arguing that economic pressure will not resolve the nearly six-month-old war. In a statement on Sunday, China’s Ministry of Foreign Affairs reaffirmed its commitment to “promoting peace talks” and “making efforts for the early restoration of peace and tranquility in the region.”

Iran has warned of retaliation against countries supporting the US measures. Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, stated on Saturday that any nation participating in sanctions would be considered an “enemy,” and vowed that “not a drop” of oil would leave the Gulf if regional neighbours joined the US campaign.

Wang Wen, dean of the Chongyang Institute for Financial Studies at Renmin University of China, said Beijing would respond proportionally to the severity of US actions.

“China maintains its desire to avoid conflict, but its bottom line cannot be crossed,” he told Al Jazeera.

For President Trump, provoking Beijing carries risks beyond economic retaliation. It could also undermine efforts to stabilise US-China relations ahead of a scheduled summit with Chinese leader Xi Jinping at the White House on September 24—their second face-to-face meeting since Washington launched its Iran campaign in late February, following Trump’s visit to Beijing in May.

Zichen Wang, deputy secretary-general of the Center for China and Globalization (CCG) think tank in Beijing, said neither side wants Iran to dominate the agenda.

“Unless the US measures become very broad or directly target major Chinese interests, both sides are likely to try to keep this dispute from overwhelming the wider agenda,” he told Al Jazeera. “That said, Chinese restraint should not be read as an absence of response.”

Erickson of Obsidian Risk Advisors cautioned that while US sanctions could raise costs and force some Chinese firms to de-risk, they are unlikely to halt Beijing’s support for Tehran entirely.

“US sanctions can absolutely force companies to de-risk in order to avoid exposure, but there will always be an entity willing to fill this role,” he said. “Xi is unlikely to merely stand by while Trump flexes the powers of American economic statecraft without flexing Beijing’s own in return.”

Despite US officials stating their goal of “collapsing” Iran’s government through intensified sanctions, Erickson expressed skepticism that economic pressure alone can achieve such an outcome.

“Unless the Trump administration is willing to burn serious bridges and employ all remaining levers of economic warfare simultaneously, there is no reasonable assertion that can be made that it will be able to produce the victory that kinetic warfare could not,” he said.

Related: Washington