Trump's Iran economic threat targets China's 80% oil share

Trump's threat to isolate Iran's economy risks a direct clash with China, which buys more than 80 percent of Tehran's shipped crude.

Trump's threat to isolate Iran's economy risks a direct clash with China, which buys more than 80 percent of Tehran's shipped crude, as the president pivots from military strikes to economic pressure.

"Whatever new economic measures the US can use will need to be directed at Iran's trading partners," said Gregory Brew, a senior analyst at the Eurasia Group, adding it will be "hard for the US to direct such actions at China, the country that matters most to Iran's economic future."

The announcement, posted to Truth Social on Wednesday, contained no detail on which countries could be affected or what instruments Washington would deploy. It comes as the war nears its six-month mark, with US gas prices at their highest ever recorded for August and the president facing pressure over the cost of the conflict ahead of the midterm elections. The US paused attacks on Iran last month after a fortnight of nightly strikes failed to bring Tehran to the negotiating table, with Pentagon advisers reportedly telling Trump the military campaign had nearly exhausted its list of targets. The Treasury has for months run "Operation Economic Fury," layering targeted sanctions on top of a naval blockade in the Strait of Hormuz — which handles about 21 percent of global oil trade — that has sought to cut off Iranian crude exports.

The threat of secondary sanctions could set up a direct confrontation with Beijing at a delicate moment: Chinese leader Xi Jinping is expected to visit the US next month, and Washington is trying to establish a new trading relationship with China. Iran's foreign minister, Abbas Araghchi, dismissed the threat on X, saying Trump's "so-called 'Economic D-Day' is a diversion from America's own crisis: unprecedented debt & surging interest costs."

The wording of Trump's announcement listed activities that must stop "immediately," including "oil smuggling, swap lines, cash transfers, exchange houses, ship registries, front companies." China buys more than 80 percent of Iran's shipped oil, according to 2025 data from analytics firm Kpler, but for the US to engage in further economic warfare with Beijing risks retaliation. Chinese foreign ministry spokesperson Lin Jian said Thursday that "sanctions and pressure tactics are not the solution," urging parties to "stick to the political and diplomatic approach."

The last time Washington escalated secondary sanctions on Iranian oil buyers, in 2018, it granted waivers to eight economies before tightening enforcement, and global crude prices swung sharply as buyers scrambled for alternative supply. This time, the escalation lands as the US navy is already facilitating the transit of 15 to 20 ships in and out of the Strait of Hormuz each night — carrying "roughly half the prewar volume" of daily oil shipments, according to Axios — while continuing to blockade Iranian exports. Ship-tracking data from Kpler showed transits remained low, and Danny Citrinowicz, the former head of the Iran branch of Israeli military intelligence, questioned how long the US could sustain the operation.

Central Asia's southern route hangs in the balance

For landlocked Central Asian economies, Iran provides one of the few overland routes to the Persian Gulf and the Indian Ocean. Kazakhstan signed a 27-year Build-Operate-Transfer agreement in June for its own terminal at Iran's largest port, Bandar Abbas, while Tajikistan has requested 2.55 million tons of crude and petroleum products from Tehran and Uzbekistan estimates potential losses from Middle East trade disruption at $1 billion to $1.5 billion, or about 0.7 percent to 1 percent of GDP. The United Arab Emirates, which provided more than 30 percent of Iran's imports before the war, announced Tuesday it would suspend all trade and financial transactions with Iran after detecting two missiles launched from the country.

A cul-de-sac of Washington's own making

Dan Shapiro, a former US ambassador to Israel and distinguished fellow at the Atlantic Council, said Trump's threat "ignores that Iran has both willingness to absorb the pain and tools to impose pain on the United States, its partners, and the world economy." "We are stuck in a cul-de-sac of our own making," Shapiro wrote on X. A 60-day negotiating period to reach a peace deal expired earlier this week with no extension announced, though Trump told reporters Wednesday that talks may resume "at some point." Mohammad Mokhber, an adviser to Iran's supreme leader, said Tuesday that military pressure and sanctions would not break Iran's resolve, while insisting Tehran remained open to dialogue.

If Washington follows through on secondary sanctions, the immediate test will be whether Beijing curbs its purchases of Iranian crude — a decision that would ripple through global oil markets already pricing a war risk premium. If China resists, the threat risks becoming a hollow escalation that deepens the standoff without changing Tehran's calculus, leaving the US to weigh the cost of enforcement against the political imperative of a deal before the midterms.

This article is for informational purposes only and does not constitute investment advice.