Will US sanctions on Iran bite? It may depend on China

Will US sanctions on Iran prove effective? The answer may hinge on China's response. Since February, Washington has employed military and diplomatic pressure on Tehran to force concessions. Despite the White House's rhetoric, no deal has materialized, and naval traffic through the Strait of Hormuz remains at risk from Iranian aggression.

With negotiations stalling, the US now appears to be shifting to Plan B: imposing sharper financial sanctions. Treasury Secretary Scott Bessent views this as a "sweeping economic offensive" aimed at inflicting a "Economic D-Day" on Iran. The UAE recently halted all trade with Iran following a fresh missile strike. Bessent announced new sanctions on 60 individuals, entities, and vessels, suggesting a connection between the UAE's move and his announcement.

However, Chinese financial institutions, believed to help facilitate Iran's oil trade, are notably absent from Bessent's list. Iran has long been the world's biggest oil importer, with China accounting for over 80% of its seaborne crude exports last year. Beijing has curtailed its purchases, but has avoided sanctioning Chinese banks.

Iranian oil has continued to reach China via deceptive shipping declarations and complex intermediary networks. The Treasury has warned Chinese banks, but no action has been taken. In April, Washington sanctioned a Dalian petrochemical refinery and several shipping companies for allegedly buying Iranian oil. Iran has dismissed the allegations and warned of retaliation if the new measures harm its oil trade.

China has stated it will not comply with the US "Economic D-Day" sanctions and threatens to retaliate if it adversely affects Iran's oil trade with Tehran.