Trump's new economic pressure on Iran faces a major challenge: China

US Treasury Secretary Scott Bessent has announced what he describes as an “economic onslaught” aimed at disrupting Iran's financial links around the world. However, China remains Iran's largest trading partner and its biggest purchaser of oil.

While Washington seeks to further isolate Iran economically, President Donald Trump is also preparing to welcome Chinese President Xi Jinping to the United States next month as both countries attempt to preserve a fragile trade truce.

Bessent's recent announcement did not provide specific details about possible measures against China. That has raised questions about how effective the campaign against Iran can be while Washington attempts to maintain pressure on Tehran without triggering a costly confrontation with Beijing.

“The announcement yesterday was very careful in my view to avoid specifics (against China), which could have led to a disruption in the summit,” said Edgard Kagan, senior adviser and Freeman Chair in China studies at the Center for Strategic and International Studies, on Tuesday. Kagan previously served as the US ambassador to Malaysia from December 2023 until February 2026.

“For Xi, a state visit to Washington is a big deal; and for Trump, hosting it is a big deal,” he said.

Kagan said Washington and Beijing will therefore need to carefully manage their relationship. The key question, he said, is whether the US can persuade China to reduce its economic cooperation with Iran and increase pressure on Tehran without prompting Beijing to reject American demands outright.

China Likely to Take a Cautious Approach

Following Bessent's announcement of “Operation Economic Outcast” on Monday, Beijing said its cooperation with Iran has always taken place within the framework of international law.

China accounts for more than 80% of Iranian oil shipments, although much of the trade is conducted through indirect channels.

Chinese Foreign Ministry spokesperson Lin Jian said China-Iran cooperation “should not be disrupted or undermined.” He also said Beijing would closely monitor developments and take necessary steps to protect its interests, while reiterating China's opposition to what it considers “illegal unilateral sanctions.”

Kagan described Beijing's response as a temporary holding position, suggesting that China will likely seek to comply with US demands to the minimum extent possible while avoiding a direct confrontation with Washington.

He noted that China has generally avoided crossing clearly defined US red lines, while continuing practices such as ship-to-ship transfers that can conceal the origin of Iranian crude and help exporters bypass American sanctions.

Sun Yun, director of the China program at the Stimson Center, said Beijing would not support the US campaign if Washington's ultimate objective were to cripple Iran's economy and bring down its government.

However, she said China could cooperate to a limited degree if the US objective is to pressure Iran into making concessions over the Strait of Hormuz or to help bring an end to the conflict.

In that situation, Sun said, China could demonstrate cooperation without completely cutting its economic ties with Iran. One possible step could be reducing its purchases of Iranian oil.

With the Trump-Xi summit approaching, Sun said neither Washington nor Beijing is likely to want a major escalation in bilateral tensions. China may offer some concessions, she said, but Washington will need to recognise that Beijing is unlikely to meet every American demand.

Analysts Say Washington May Avoid Tough Measures Against China

So far, the Trump administration has stopped short of imposing sanctions on major Chinese companies or banks that have significant links to the US financial system and could therefore be particularly vulnerable to American penalties.

On Monday, the Treasury Department announced sanctions against nearly 60 Iran-related entities, accusing them of supporting Iran's nuclear and missile programs, cyber operations, and oil exports.

Several individuals and organisations in mainland China and Hong Kong were among those targeted for allegedly assisting Iran's missile and nuclear activities. The US also sanctioned a Chinese-owned crude oil tanker accused of transporting millions of barrels of Iranian oil to China this year, along with a Hong Kong-based company linked to the so-called shadow fleet used to transport Iranian crude.

Ali Wyne, senior research and advocacy adviser on US-China relations at the International Crisis Group, said Trump may be reluctant to take significantly tougher action against China ahead of Xi's planned visit.

Given Trump's desire to preserve the US-China trade truce and maintain his personal relationship with Xi, Wyne said it would be unlikely for the president to abruptly adopt a highly confrontational stance just weeks before the Chinese leader's state visit.

Xi's visit could also help set the stage for Trump to travel to China in November for the leaders' summit of the Asia-Pacific Economic Cooperation grouping.

During his second term, Trump has generally taken a less confrontational approach toward China than he did during his first presidency. He has repeatedly highlighted his relationship with Xi, following a major trade conflict last year that saw both countries impose increasingly higher tariffs.

The US business community has also welcomed the planned visit, viewing a face-to-face meeting between the two leaders as a positive development even if major agreements remain difficult to achieve.

Craig Singleton, senior director for China at the Foundation for Defense of Democracies, said Beijing appears to be counting on Washington's reluctance to disrupt the current relationship between the two leaders by targeting major Chinese companies before the summit.

Source: AP/UNB