US 'Economic D-Day' Threat Against Iran Poses Test for China Ties

The administration of US President Donald Trump has vowed to cut off "all" of Iran's economic lifelines in what US officials describe as the harshest sanctions campaign to date. However, if fully implemented, this move could place China, Iran's largest trading partner, at the center of US sanctions.

Analysts say this is a risky choice for Washington, as it is highly likely to draw a strong reaction from Beijing. Some experts even doubt that the measures the Trump administration is expected to announce on Monday (US time) will live up to its earlier tough rhetoric in scope and severity.

In an interview with the Financial Times on Sunday, US Treasury Secretary Scott Bessent warned countries wary of cutting ties with Iran not to "underestimate the cost of challenging Washington." Bessent is expected to unveil the new sanctions at a press conference at 17:00 GMT.

Sanctions expert Brett Erickson, managing director at Obsidian Risk Advisors, said the Trump administration's willingness to target China would signal its determination to wage a long-term economic campaign against Tehran. "That's not a relationship that can be taken lightly. If the US actually brings China into it, that's a serious signal that the US plans to wage this economic war over the long haul," Erickson told Al Jazeera.

According to the US-China Economic and Security Review Commission, two-way trade between China and Iran reached $9.96 billion in 2025, not including roughly $31.2 billion from Iranian crude oil shipments. The US Treasury estimates that China's purchases of Iranian oil account for about 90% of Tehran's total oil sales, which are considered a vital economic lifeline.

So far, the Trump administration's Iran sanctions have targeted only a handful of China-based entities. In April, the US sanctioned Hengli Petrochemical (Dalian), one of China's largest independent oil refiners, for allegedly buying Iranian oil. In May, the US sanctioned four companies in Hong Kong; in August, it imposed sanctions on six shipping companies based in China and Hong Kong. Washington has yet to touch Chinese financial institutions, which are seen as a key link in Iran's oil trade.

Expert Jennifer Kavanagh, a senior fellow at Defense Priorities, said cutting off economic ties with China is key to any effort to increase pressure on Iran, but the US will not do it. If it did, China would retaliate and has the strength to inflict damage on the US.

China has repeatedly condemned US sanctions against Iran, arguing that economic pressure will not resolve the nearly six-month-old conflict. In a statement on Sunday, China's Foreign Ministry reaffirmed Beijing's "commitment to promoting peaceful negotiations" and its readiness to "continue efforts for the early restoration of peace and stability in the region."

Iran, for its part, has threatened to retaliate against countries that support US measures. Mohsen Rezaei, secretary of Iran's Supreme National Security Council, warned on Saturday that any country participating in sanctions would be considered an "enemy," and if neighboring countries join the US campaign, "not a drop of oil" would leave the Gulf.

Professor Wang Wen, dean of the Chongyang Institute for Financial Studies at Renmin University of China, said Beijing would surely take countermeasures against any US sanctions, and the intensity of its response would depend on "the severity of US actions." He said: "China maintains a desire to avoid conflict, but the bottom line cannot be crossed."

For Trump, angering Beijing carries not only economic risk but also the potential to derail efforts to stabilize US-China relations just weeks before he is expected to host Chinese President Xi Jinping at the White House. The summit, scheduled for September 24, would be the second in-person meeting between the two leaders since Washington launched its campaign against Iran in late February, following Trump's visit to Beijing in May.

Zichen Wang, deputy secretary-general of the Center for China and Globalization (CCG), said neither Beijing nor Washington wants the Iran issue to dominate the upcoming summit. However, China's restraint does not mean there will be no response. "Beijing often avoids immediate escalation in rhetoric, but when US unilateral actions concretely affect Chinese businesses or interests, they have shown a willingness to respond with practical measures," he said.

Expert Erickson said the US could make it more difficult and costly for China to continue providing economic support to Iran, but it is unlikely to fully prevent Beijing if it is determined to maintain ties. "US sanctions may force companies to de-risk to avoid exposure, but there will always be an entity ready to step into that role," he said, while stressing that Xi is unlikely to "sit still" while Trump showcases US economic power without a response.

Although US officials have vowed to "collapse" the Iranian government through intensified sanctions, Erickson expressed doubt that the Trump administration can achieve its war aims through economic pressure alone. "Unless the Trump administration is willing to burn all bridges and simultaneously use all remaining economic-warfare levers, there is no reasonable basis to claim it can produce a victory that armed conflict could not," he said.