Trump skirts last Iran lever ahead of Xi visit

President Donald Trump has called for the United Nations to unite against Iran, but Beijing may not be a willing partner. The US has refrained from sanctioning Chinese banks, even as it seeks to apply maximum economic pressure on Iran. This remains "the last line to cross" if one aims to "put the squeeze" on Tehran, according to Bloomberg Economics' Jennifer Welch, who previously headed the National Security Council's China and Taiwan division under Trump.

Other measures, such as sanctions on Iranian airlines, are "painful" but not as impactful, Welch added. Treasury Secretary Scott Bessent discussed Iran-related sanctions with Chinese Vice Premier He Lifeng over the weekend, emphasizing that "quiet, behind-the-scenes discussions are better." A senior US official revealed that the Treasury Department had targeted some Chinese firms and would continue doing so.

However, the prospect of fully pressuring Iran is unlikely, given the US's dependence on Chinese rare earths. "Some of the banks... would be rather politically sensitive to Beijing and so would risk some significant flare-up in tension," Welch noted.