China's pivotal role
When Donald Trump launched what he called an "economic warfare and isolation on an unprecedented scale" against Iran, the American president anticipated support from international partners. Instead, his strategy has encountered resistance from the very leaders he considers allies, particularly Chinese President Xi Jinping, whose cooperation is essential for the sanctions to succeed.
Trump's Iran policy centers on economic strangulation after military force failed to achieve regime change or eliminate Tehran's nuclear capabilities. Treasury Secretary Scott Bessent unveiled Operation Economic Outcast on August 24, 2026, a comprehensive sanctions package targeting digital assets, technology, gold, aviation and shipping sectors. The initiative sanctioned nearly 60 entities and vessels involved in Iranian oil smuggling and nuclear procurement, building on Operation Economic Fury that Washington has pursued since April 2026.
The sanctions campaign accompanies a U.S. naval blockade of Iran that began on April 13, 2026. By July, the blockade had reduced Iranian oil exports to China by approximately 40% from prewar levels, according to Bessent. Iran's currency reflected the mounting pressure, with the rial hitting a record low of more than 2 million to the U.S. dollar on the open market in August as Washington prepared the new sanctions announcement.
China's pivotal role
Beijing holds the key to whether Trump's economic strategy succeeds or fails. China has served as Iran's primary oil customer for the past decade, purchasing about 90% of Iran's oil supply. In 2025 alone, China bought an estimated $31 billion in crude oil from Iran, accounting for nearly 45% of the Iranian government's budget, according to a March report from the U.S.-China Economic and Security Review Commission.
China maintains that it opposes unilateral sanctions on principle and serves as Tehran's leading trading partner overall. Throughout multiple international embargoes on Iranian hydrocarbons over nuclear compliance issues, Chinese buyers have consistently disregarded the restrictions. Beijing has already signaled its intention to "take all necessary measures" to retaliate against any U.S. Treasury sanctions targeting Chinese entities.
Without Chinese cooperation, Bessent's economic offensive against Iran would struggle to achieve its stated objectives of collapsing or forcing the submission of the regime in Tehran.
Leverage and limitations
Xi Jinping is scheduled to visit Washington on September 24, 2026, for his first state visit to the United States in over a decade. His last state visit occurred in September 2015 under President Obama, making the upcoming trip a rare diplomatic event that underscores the significance of U.S.-China relations.
Beijing possesses considerable leverage in negotiations with Washington. China controls more than 90% of global refined rare earths output and processes about 90% of the world's rare earths. The United States obtains approximately 96% of its rare earths from China. In April 2026, China demonstrated this power by restricting shipments of seven rare earths to the U.S., prompting Washington to soften its stance and extend trade negotiation deadlines to prevent losing access to these critical materials.
Early in his second term, Trump retreated in a trade war he had initiated against China through tariffs after Beijing wielded the rare earths weapon. China also remains one of the principal buyers and holders of U.S. debt, providing additional leverage in times of dollar uncertainty.
Trump seeks to stabilize economic relations with China, making significant concessions on Iran policy unlikely from his Chinese counterpart. The UAE has suspended all trade and financial dealings with Tehran in August 2026, demonstrating that some regional partners are complying with U.S. pressure. However, the resistance from Beijing, which Trump paradoxically counts among his international "friends" alongside Russia's Vladimir Putin and North Korea's Kim Jong Un, reveals the limitations of personal diplomacy in achieving strategic objectives.
The fundamental challenge for the American president remains clear: those he cultivates as friends through flattery and personal attention refuse to abandon their own interests to support his Iran strategy, leaving his economic warfare campaign without its most critical component.
