China vs Trump Over Iran Sanctions: Why Beijing Is Threatening to Push Back

The United States has imposed new sanctions on more than 60 entities, individuals and vessels linked to Iran and warned that foreign companies and financial institutions helping Tehran could also face penalties. China, Iran’s largest oil customer, has rejected Washington’s demands and said its economic cooperation with Tehran is conducted within international law.

The measures, announced Aug. 24 by Treasury Secretary Scott Bessent, form part of “Operation Economic Outcast,” a broader campaign intended to restrict Iran’s access to international finance and disrupt networks that generate revenue for the Iranian government.

Treasury said the targets include networks involved in oil revenue generation, illicit nuclear and missile technology procurement and cyber operations.

Washington is combining military pressure with an expanded sanctions campaign aimed at reducing Tehran’s ability to generate and move revenue.

Bessent has also warned that the latest designations may not be the final step. Asked about Chinese banks and other institutions involved in Iranian transactions, he said, “If they facilitate transactions and are part of the ecosystem that turns Iranian oil into money, into repression, they will be targeted.”

Bessent also described the strategy as the “economic asphyxiation” of Iran. He has said the administration expects a major announcement involving a financial institution by the end of the week, although he has not identified the institution.

Beijing Rejects U.S. Pressure

China has responded by saying it is rejecting the “unilateral and unlawful” imposition of sanctions by the United Nations Security Council, without any international law or authorization from the council.

At a Foreign Ministry press conference on Aug. 25, spokesperson Lin Jian said, “Economic warfare and maximum pressure provide no solution.” He said such measures could increase tensions and disrupt the global economic and financial order.

Lin also directly addressed China’s economic relationship with Iran, saying, “China’s cooperation with Iran is conducted within the framework of international law, thus should not be disrupted.” He added that Beijing would do what was necessary to protect its rights and interests.

The Chinese had also warned of the same before the latest sanctions. On Aug. 21, Lin has said that sanctions and pressure tactics are not the answer and that she would like to see political and diplomatic moves instead.

The U.S. seeks to cut off the financial and oil connections that support Iran, while China insists international law must be followed in oil and trade relations with Iran.

China Remains Iran’s Largest Oil Buyer

On Aug. 20, China has imported about 1.38 million barrels of Iranian oil per day in 2025, making it Iran’s largest oil buyer. Vortexa separately estimated Chinese imports of Iranian crude averaged about 1.4 million barrels per day in 2025.

However, the flow has changed significantly since the U.S. blockade and renewed pressure on Iranian oil exports. On Aug. 24, the Iranian shipments to China had fallen to about 534,000 barrels per day in August from 823,000 barrels per day in July. Earlier in 2026, shipments had reached as high as 1.58 million barrels per day.

China’s independent refineries, particularly the so-called “teapot” refiners, have historically been important buyers of Iranian crude because of the discounts available on sanctioned oil. The U.S. Energy Information Administration said about 90% of China’s Iranian crude imports were taken by independent teapot refineries in 2024.

Iranian oil is sometimes presented as originating from countries such as Malaysia or Indonesia, while transactions can be settled in Chinese currency through opaque trading networks.

In July, Shandong teapots were increasingly turning to crude from Iraq, the United Arab Emirates and Qatar as Iranian supplies became more difficult and expensive to obtain.

The Risk of Chinese Banks Becoming the Next Target

Bessent has explicitly declined to rule out such action. His warning that entities facilitating Iranian oil transactions could be targeted leaves Chinese refiners, traders, shipping companies and financial institutions exposed if Washington determines they are helping Tehran circumvent sanctions.

Chinese financial institutions have extensive links to the U.S.-dominated global financial system, meaning a major sanctions designation could affect companies and transactions well beyond the Iranian oil market.

At the same time, Beijing has demonstrated that it does not accept the U.S. sanctions regime as automatically binding on Chinese entities. Lin’s Aug. 25 comments made clear that China intends to defend its economic interests rather than simply adopt Washington’s Iran policy.

China’s Oil Buffer Provides Some Room

In January, China’s commercial and refinery inventories had reached about 1.206 billion barrels in late December and early January, while analysts cited in recent reporting estimate China’s total oil inventories, including strategic stocks, at roughly 1 billion to 1.4 billion barrels.

Iranian crude remains attractive to independent refiners because of its pricing and established trading networks, while replacing those barrels requires sourcing crude from other producers.

Iran Sanctions Could Deepen U.S.-China Tensions

For the Trump administration, enforcing the new measures against Chinese companies would demonstrate whether its threat to impose secondary sanctions extends to one of Iran’s most important trading partners. For Beijing, complying with those demands could undermine a long-standing energy relationship and set a precedent for U.S. influence over China’s trade decisions.

Bessent’s warning that “no one is above the reach of U.S. sanctions” suggests China is not automatically exempt, while Beijing’s response indicates it is prepared to resist measures it regards as unilateral economic coercion.

Washington is expanding the economic pressure on Tehran and its international networks, while Beijing is signaling that pressure on Iran will not automatically translate into Chinese compliance.