CHINA PUSHES BACK AS U.S. IRAN SANCTIONS THREATEN TRADE PARTNERS

Developing story: U.S. sanctions details were still pending when the article was drafted.

China warned Monday that it would protect its rights as the United States prepared new sanctions against Iran and its trading partners, signaling that Washington’s planned economic campaign could expand beyond the Middle East into a broader confrontation over trade, finance and sovereignty. Beijing’s foreign ministry said it would closely watch developments and urged all parties to act with restraint. The statement came before U.S. Treasury Secretary Scott Bessent was expected to outline expanded measures designed to sever Iran’s remaining economic links.

The Chinese response matters because secondary sanctions depend on foreign compliance. Washington can restrict U.S. persons from doing business with Iran directly, but the stronger tool is the threat to penalize non-U.S. companies, banks and governments that maintain specified Iranian transactions. China has long objected to those measures, saying one country should not use its financial power to dictate the lawful trade of others. If Beijing resists, the U.S. will face a choice between enforcing sanctions against major Chinese entities or accepting gaps in the pressure campaign.

The dispute is tied to energy. Iran has depended heavily on buyers willing to handle crude and related trade despite U.S. restrictions. Chinese refiners, traders and intermediaries are often watched closely in that context, though transactions can be opaque and routed through networks that are difficult to police. A serious U.S. effort to target Iranian trade partners could therefore affect Chinese energy firms, banks, ports, shipping companies and insurers. It could also force companies to choose between Iranian business and continued access to dollar clearing, U.S. markets and global financial infrastructure.

Beijing’s public line was cautious but firm. A foreign ministry spokesperson said China would do what was necessary to protect its rights and interests, while also saying that sanctions and pressure do not help resolve disputes. That position reflects China’s broader criticism of U.S. unilateral sanctions, which it sees as instruments of geopolitical coercion. The statement did not specify retaliation, but it placed Washington on notice that broad measures against Chinese-linked trade could generate diplomatic, legal or commercial responses.

The United States is preparing the sanctions after months of conflict with Iran and heightened tension over the Strait of Hormuz. Iranian officials have warned that support for new U.S. measures could be treated as hostile action, and Tehran has separately threatened ships it says violated transit rules in the Gulf. That creates a layered risk: U.S. sanctions may target economic networks, Iran may threaten shipping and China may object to enforcement against its companies. The result could be an economic and maritime standoff involving the world’s two largest economies and a major Gulf power.

For Europe, Britain and Canada, the China factor complicates alignment with Washington. Allied governments may support pressure on Iran in principle but worry that a U.S.-China sanctions fight could disrupt energy markets, technology supply chains and global growth. European companies with exposure to both the U.S. and China could be caught between compliance demands and commercial retaliation. British and Canadian banks and insurers may have to review counterparties with Iranian or Chinese links. The larger the sanctions net, the more difficult it becomes to separate Iran policy from global economic policy.

The Trump administration’s strategy appears to rest on the idea that access to the U.S. financial system is too valuable for most firms to risk. That assumption has often been effective, especially against banks that cannot operate without dollar access. But China’s state-linked companies and financial institutions may calculate risk differently if Beijing sees the sanctions as an attack on national interests. The U.S. could target smaller firms first, but a campaign advertised as “economic D-Day” raises expectations that Washington will act against larger networks if Iranian trade continues.

Markets are already watching the sanctions for signals about supply and enforcement. If the measures focus on symbolic targets, the immediate economic impact may be limited. If they credibly threaten Chinese refiners or major banks, oil flows, freight rates and currency markets could move sharply. The risk is not only the loss of Iranian barrels but also the possibility that sanctions become another front in U.S.-China economic competition. Investors are alert to any measure that could add to existing tensions over technology, tariffs, commodities and finance.

China also has diplomatic interests in presenting itself as an advocate of restraint. By criticizing sanctions, Beijing can appeal to countries that resent U.S. extraterritorial enforcement, including states in the Global South. It can also argue that economic pressure worsens conflict rather than producing negotiated outcomes. Washington, by contrast, argues that Iran’s conduct requires stronger pressure and that foreign trade channels allow Tehran to sustain destabilizing activity. The clash is therefore not only about specific transactions but about competing visions of how international pressure should be applied.

The immediate question is how far the U.S. Treasury will go and whether China’s warning will alter the package or its enforcement. No direct Chinese retaliation was announced Monday. Still, Beijing’s statement shows that the Iran sanctions campaign cannot be viewed only through the U.S.-Iran lens. If Washington targets Iran’s trade partners aggressively, the next phase may involve not just Tehran’s response, but also China’s willingness to challenge or absorb U.S. financial pressure. Fact-check date: August 24, 2026. Article type: News. Sources: Reuters; Associated Press. Developing note: U.S. sanctions details were still pending when the article was drafted.