Treasury Secretary Scott Bessent announced a new campaign, dubbed "Operation Economic Outcast" and Iran's "Economic D-Day," to sever Iran's economic lifelines globally. The initiative threatens secondary sanctions against any country or entity that continues to do business with Iran, with Bessent stating that the US objective is to isolate the regime until "Tehran stands alone." This expansion of sanctions targets those involved in buying or transporting Iranian oil, facilitating financial transactions, or participating in Iran's digital assets, technology, gold, aviation, and shipping sectors. Bessent emphasized that no one is above US sanctions and that timelines would be sent to individual countries to cease identified activities.
The new sanctions campaign immediately raised questions about its impact on China, Iran's top trading partner. In 2025, China's two-way trade with Iran reached $9.96 billion, excluding an estimated $31.2 billion in Iranian oil shipments. China accounts for approximately 90 percent of Iran's oil sales, making its continued engagement crucial to Iran's economy. While Bessent suggested that China would not be exempt from these new measures, the US has historically avoided directly targeting major Chinese financial institutions or companies, with previous sanctions only affecting a few minor China-based entities, such as Hengli Petrochemical (Dalian) Refinery in April.
The aggressive stance against Iran, particularly the implicit threat to China, risks unraveling a fragile trade truce between Washington and Beijing. The US and China had established a trade truce months prior, with President Trump and President Xi Jinping having met in May and a subsequent meeting scheduled for September. Analysts like Brett Erickson of Obsidian Risk Advisors suggest that targeting China would be a significant indicator of the US's resolve for a prolonged economic offensive, given Beijing's strong opposition to US sanctions on Iran and its potential for economic retaliation. Jennifer Kavanagh of Defense Priorities also noted that while cutting China's economic ties is key to pressuring Iran, the US might hesitate due to potential blowback.
Experts and policymakers acknowledge the delicate balance the Trump administration faces. While Bessent stated the US would use "quiet diplomacy" with countries, any significant pressure on China could lead to economic retaliation from Beijing and potentially undermine the critical minerals supply that the US relies on for its defense industry. China's export restrictions on rare-earth minerals are due to take effect in a few months, and the US military's stockpile is reportedly being depleted by the ongoing war with Iran. The effectiveness of "Operation Economic Outcast" in achieving its goals without severely damaging US-China relations remains a key concern.
