The Trump administration's intensified efforts to isolate Iran economically face a significant obstacle in China, the Islamic Republic's primary trading partner and oil purchaser.
Treasury Secretary Scott Bessent recently announced an "economic onslaught" aimed at severing Iran's global financial connections. However, the strategy's effectiveness is complicated by the U.S.'s delicate trade relationship with China, particularly with an upcoming meeting between President Donald Trump and Chinese leader Xi Jinping.
Details on how the U.S. intends to target China's involvement with Iran were notably absent from Bessent's remarks. This omission raises questions about the campaign's potential impact, as the U.S. must balance pressure on Iran with avoiding actions that could destabilize the broader U.S. economy or escalate tensions 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. He noted that Xi's state visit to Washington and Trump's hosting of it are significant events for both leaders.
Kagan suggested a complex diplomatic negotiation will be necessary. "I think the real question is, is there room to push (the Chinese) to reduce what they're doing with Iran, to put more pressure on the Iranian regime in a way that doesn't lead them to say, 'This is unreasonable, and we're not going to comply,'" he stated.
In response to the U.S. initiative, China's foreign ministry spokesperson Lin Jian asserted that Beijing's cooperation with Iran adheres to international law. China reportedly receives over 80% of Iranian oil, often through indirect channels to circumvent sanctions. Lin added that China-Iran cooperation "should not be disrupted or undermined" and that China will take necessary measures to protect its interests, reiterating its opposition to unilateral sanctions.
Kagan characterized Beijing's response as a "holding response," predicting that China will attempt to comply minimally without openly defying the U.S. He pointed out that while Beijing has avoided explicit violations, it has not fully addressed the spirit of U.S. sanctions, citing practices like ship-to-ship transfers to obscure the origin of Iranian oil.
Sun Yun, director of the China program at the Stimson Center, indicated that China would likely resist U.S. efforts aimed at regime change in Iran. However, she suggested that if the U.S. objective is to compel Iran to make concessions regarding maritime security or conflict de-escalation, China might cooperate by reducing oil imports from Iran to demonstrate compliance without completely severing ties.
With the Trump-Xi summit approaching, neither nation is inclined toward major bilateral escalation, according to Sun. "China needs to give U.S. something, and U.S. needs to understand and accept that it is not going to be everything U.S. asks for," she observed.
Thus far, the Trump administration has refrained from sanctioning major Chinese businesses or banks directly linked to the U.S. financial system, which would make them vulnerable to U.S. penalties.
The Treasury Department's recent actions targeted nearly 60 Iran-linked entities for their alleged involvement in Iran's nuclear and missile programs, cyber activities, and oil shipments. Among those sanctioned were entities and individuals in mainland China and Hong Kong supporting Iran's missile and nuclear programs, a China-owned crude oil tanker for transporting Iranian oil, and a Hong Kong-based business involved in shadow fleet operations for Iranian oil shipments.
Ali Wyne, senior research and advocacy adviser on U.S.-China relations at the International Crisis Group, suggested that Trump may be hesitant to adopt a confrontational stance toward China so close to Xi's state visit. Wyne noted Trump's desire to maintain a trade truce and his personal relationship with Xi, making a significant shift in posture unlikely.
Furthermore, Xi's U.S. visit could potentially set the stage for Trump to attend the Asia-Pacific Economic Cooperation leaders' summit in China in November. This potential engagement follows a period where Trump, in his second term, has shown a less hawkish approach to China compared to his first presidency, frequently highlighting his relationship with Xi after a substantial trade war.
Craig Singleton, senior director for China at the Foundation for Defense of Democracies, believes Beijing is counting on Washington's reluctance to jeopardize the current leader-level dynamic by sanctioning major Chinese entities before the summit.