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Trump’s Economic War on Iran Puts China in the Crosshairs

Threats to sanction Chinese banks raise the cost of the offensive to isolate Tehran: Washington could end up straining its economic relationship with…

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Trump’s Economic War on Iran Puts China in the Crosshairs

Threats to sanction Chinese banks over ties to Iran raise the cost of the conflict with Tehran: Washington could end up straining its economic relationship with Beijing.

President Donald Trump opened the door to sanctioning Chinese banks as his administration intensifies its campaign to cut off Iran’s sources of income, according to CNBC and Politico.

  • Why it matters: China is Iran’s main trading partner, so economically isolating Tehran could force Washington to pressure Chinese financial institutions and assume possible global consequences.

Chinese Banks Emerge as the Next Target in the Iran Conflict

Trump said on Thursday that he could be sanctioning Chinese banks, although he avoided confirming specific measures. «I don’t have to announce everything,» he responded to journalists, according to CNBC.

The warning comes after the launch of Operation Economic Outcast, an offensive announced by Treasury Secretary Scott Bessent to shut down Iran’s international financial connections.

  • The scope: The Treasury expanded the risk of secondary sanctions in five Iranian sectors: digital assets, technology, gold, aviation, and maritime transport.
  • The limit: The initial list did not include Chinese banks, although it did include companies from China and Hong Kong linked by Washington to Iranian oil and missile technology.

Bessent warned that Chinese banks that are part of the system used to convert Iranian oil into income could become targets.

China Complicates the Attempt to Isolate Iran with Sanctions

The challenge for Washington is that China holds a central position in Iranian oil exports.

Politico notes that independent Chinese refineries buy around 90% of the crude exported by Iran, and provincial banks participate in some of those financial operations.

Sanctioning large Chinese state-owned banks would, however, be a significant leap.

  • The risk: Four major Chinese state-owned banks accumulate around $25 trillion in combined assets, according to data cited by Politico.
  • The warning: Bessent acknowledged the danger of a financial escalation by publicly wondering why he would want to «blow up the global financial system».

China has rejected the US threats. Its Ministry of Foreign Affairs warned that new sanctions over the Iran conflict could increase tensions and disrupt the international economic and financial order.

Economic Pressure Threatens Truce with Beijing

The White House faces a delicate decision: intensify the isolation of Iran without provoking a new economic confrontation with China.

The tension coincides with preparations for a visit by Chinese President Xi Jinping to Washington next month.

  • The contradiction: US and Chinese officials continue to prepare for high-level contacts while Washington threatens entities that maintain economic relations with Iran.
  • In Congress: Republican and Democratic lawmakers have called for holding Chinese financial institutions accountable for helping Tehran evade sanctions.

A campaign against major banks could also provoke Beijing’s retaliation on trade, critical minerals, or supply chains, risks raised by lawmakers cited by Politico.

Trump Raises the Confrontation Message

Sanctions such as financial pressure are part of a broader strategy to project dominance over Iran and those who maintain ties with its economy.

Trump’s recent statements on Chinese espionage and his message on the Strait of Hormuz increase that image of confrontation, although available information does not demonstrate a relationship between those episodes.

  • Hormuz: The waterway was used for around 25% of global oil exports before the war, according to the International Energy Agency.
  • What’s next: The question will be whether Washington limits the pressure to small businesses and banks or decides to move against globally important Chinese financial institutions.

That step would show how far Trump is willing to take the pressure on Beijing to try to close Iran’s last economic avenues.

The offensive against Iran thus leaves Trump facing a broader decision: maintain pressure on smaller businesses and entities or risk hitting major Chinese banks.

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SOURCE: The White House / POLITICO / NBC