Whether President Donald Trump can turn the sanctions campaign into meaningful leverage over Iran will depend less on measures announced against Iranian entities and more on how aggressively it is willing to confront Chinese companies, banks and shipping networks that keep Iran connected to global markets.
The Trump administration has framed its latest sanctions drive as an attempt to sever every economic channel sustaining Iran. But the structure of Iran’s economy makes that objective inseparable from China.
According to the US-China Economic and Security Review Commission, China and Iran recorded nearly $10 billion in two-way trade in 2025, excluding an estimated $31.2 billion in Iranian oil shipments. China also accounts for roughly 90 percent of Iran’s oil sales, according to the US Treasury Department, making Beijing by far Tehran’s most important economic partner.
The scale of that dependence is particularly evident in the energy sector. Reuters reported that China imported an average of 1.4 million barrels per day of Iranian crude in 2025, based on data from ship-tracking firm Kpler. Even after US naval pressure and renewed restrictions disrupted flows through the Strait of Hormuz, China remained the primary destination for Iranian exports. Kpler data cited by Reuters showed Iranian shipments to China at 785,000 barrels per day in June, 823,000 barrels per day in July and around 534,000 barrels per day so far in August.
Those figures underline a simple reality. If Chinese demand remains intact, Iran retains a source of hard currency that can cushion the impact of even severe sanctions.
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The United States has sanctioned Iran for decades. Those restrictions have targeted oil exports, shipping, aviation, military procurement networks, cryptocurrency transactions and businesses linked to the Islamic Revolutionary Guard Corps. But Iran has repeatedly adapted.
According to Reuters, Iranian networks have developed sophisticated methods for evading sanctions through front companies, shell entities and constantly changing vessel registrations. Oil cargoes shipped to China are often relabelled as Malaysian and, more recently, Indonesian crude. Payments are frequently settled in Chinese currency through opaque chains of intermediaries rather than through conventional dollar-based channels.
This is why many analysts view sanctions directed solely at Iran as insufficient.
Brett Erickson, managing principal at Obsidian Risk Advisors, told Al Jazeera that Washington’s willingness to target China would reveal whether it is serious about a long-term economic campaign. In his view, bringing China directly into the sanctions framework would signal that the US intends to wage a prolonged economic war rather than merely increase pressure at the margins.
His argument reflects a larger consensus among sanctions specialists. Iran’s economy has become deeply integrated with Chinese commercial networks. Severing Tehran from those networks is considerably harder than sanctioning Iranian entities themselves.
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Why Chinese banks matter more than Chinese refineries
Until now, the Trump administration has largely focused on what might be described as the outer layers of the Iran-China trade network.
Washington sanctioned Hengli Petrochemical, one of China’s largest independent refiners, in April over alleged purchases of Iranian crude. It has also targeted Hong Kong-based companies, shipping operators and vessels associated with Iranian oil transportation. Reuters reported that around 40 shipping firms and vessels were included in the sanctions action against Hengli.
But the most consequential part of the system remains largely untouched.
Chinese financial institutions play a crucial role in facilitating transactions linked to Iranian oil. Reuters reported that the US Treasury has warned two major Chinese banks about potential exposure to secondary sanctions if Iranian funds are found moving through their systems. However, Washington has stopped short of formally designating them.
That restraint indicates sanctions against major Chinese banks would represent a dramatic escalation. Unlike targeting smaller refiners or shipping firms, restricting access to the dollar-based financial system for large Chinese financial institutions would directly affect one of the world’s most important banking networks.
A Reuters report suggests that Monday’s announcement could broaden the categories of activity subject to secondary sanctions. Treasury officials are expected to warn countries that maintaining business ties with Iran could result in companies being cut off from the dollar system.
If those powers are used aggressively against Chinese banks, the sanctions campaign would enter an entirely different phase.
The challenge for the White House is that tougher sanctions on China carry costs far beyond Iran. Jennifer Kavanagh, a senior fellow at Defense Priorities, told Al Jazeera that cutting Chinese economic ties with Iran is essential for any serious pressure campaign. But she argued that Washington is unlikely to go that far because China possesses substantial leverage of its own.
The timing makes that dilemma especially acute. Trump is scheduled to host Chinese President Xi Jinping in Washington on September 24. The meeting is intended to stabilise bilateral relations after months of tensions and preserve understandings on trade and critical supply chains.
New sanctions against Chinese banks could jeopardize efforts to extend an agreement that has kept Chinese rare earth exports flowing while capping US tariffs. What begins as a sanctions campaign against Iran could therefore spill into trade, technology and industrial policy disputes between the world’s two largest economies.
So the issue at the heart of economic D-Day is whether the US administration is prepared to risk larger strategic objectives with China in pursuit of maximum economic pressure on Iran.
Chinese officials have consistently opposed unilateral sanctions on Iran and have called for a diplomatic resolution to the conflict. But China’s response is unlikely to be limited to rhetoric if core economic interests are threatened.
Wang Wen, dean of the Chongyang Institute for Financial Studies at Renmin University, told Al Jazeera that China would inevitably take countermeasures if the US imposed sanctions affecting Chinese interests. The severity of Beijing’s response, he said, would depend on the scale of Washington’s actions.
Zichen Wang, deputy secretary-general of the Center for China and Globalization, offered a more nuanced assessment. He told Al Jazeera that neither side is likely to want Iran to dominate the agenda ahead of the Trump-Xi summit. However, he warned that Chinese restraint should not be mistaken for passivity and noted Beijing’s growing willingness to respond with practical countermeasures when its companies are affected.
Those countermeasures could take many forms. China could restrict cooperation in trade negotiations, complicate market access for American firms or reduce coordination on issues where the US seeks Chinese support. The precise response matters less than the underlying message that pressure on Iran increasingly risks becoming pressure on China.
Iran’s “survival economy” remains a challenge
Even if the US expands sanctions dramatically, success is not guaranteed. As Jorge Leon, head of geopolitical analysis at Rystad Energy, told CNN, Iran has spent decades developing what amounts to a “survival economy”. Years of sanctions have forced the country to create alternative trade channels, build smuggling networks and adapt to financial isolation.
This resilience helps explain why previous sanctions campaigns have often inflicted pain without achieving decisive political outcomes. Iranian living standards have deteriorated, inflation has surged and the currency has repeatedly weakened, but the political system has endured.
Erickson told Al Jazeera that unless the Trump administration is prepared to use every remaining economic lever simultaneously and accept serious damage to relations with China, it is difficult to argue that sanctions alone can deliver what military pressure has failed to achieve. This observation goes to the heart of the current strategy. Economic coercion may increase costs for Tehran. Whether it can compel major political concessions is a far more uncertain proposition.
The rhetoric surrounding America’s latest sanctions package suggests an unprecedented economic assault on Iran. However, the effectiveness of the campaign will not be determined by the number of Iranian entities added to sanctions lists or by the severity of Treasury Department language.
The decisive question is whether the US is willing to target the Chinese institutions that enable Iran’s continued access to global commerce. Chinese refiners, shipping companies and, above all, financial institutions sit at the centre of the networks that keep Iranian oil flowing and Iranian revenues alive.
If the Trump administration avoids confronting those networks, the sanctions campaign may inflict additional hardship on Iran without fundamentally altering the strategic balance. If it does move against them, it risks transforming an Iran pressure campaign into a major confrontation with China just weeks before a high-stakes summit between Trump and Xi.
That is why America’s “economic D-Day” is ultimately not just about Iran. It is a test of how much economic and diplomatic friction Trump is willing to absorb in order to make sanctions truly bite. The future of the pressure campaign may depend less on Tehran’s response than on Beijing’s.