According to Bloomberg's report on August 21, when U.S. Treasury Secretary Scott Berdonte vowed to increase pressure on Iran by targeting its economic partners, he echoed the warnings issued by former President George W. Bush to U.S. allies after the September 11 attacks.
"You will have to choose sides, either with us or against us. This will be the largest economic isolation action in world history," said Bernstein on CNBC.
This tough wording is intended to highlight Washington’s determination to punish those countries that continue to do business with the Islamic Republic of Iran. Besent said he would announce a plan at his press conference on Monday.
But this also reflects the worrying lack of choices that the United States faces in ending this unpopular conflict. At the same time, this statement reminds us of that notorious phrase—which foreshadowed America’s ongoing “endless war” in the Middle East for the next 20 years. President Trump and his Defense Secretary Pete Hegseth have repeatedly promised to avoid repeating such mistakes.
Reports say that China will be the biggest test to determine whether Washington truly has the determination to implement this policy.
Beijing is Iran's major oil buyer. So far, the Trump administration has shown little willingness to challenge China's economic ties with Iran, especially given that the two major economies are maintaining a fragile trade truce.
Iran has been subject to severe sanctions for decades. After months of continuous air strikes failed to force Tehran to sign agreements, end the war, reopen the Strait of Hormuz, and abandon its nuclear materials, the United States is currently imposing a naval blockade on Iranian ports.
Reports suggest that it is still unclear what other meaningful economic measures Washington has in hand, aside from targeting China or intensifying sanctions against small entities in other countries that do business with Iran. Meanwhile, as the war continues, the damage to economies around the world is also expanding.
International Crisis Organization Deputy Program Director Ali Vaez said, "The United States does not have sufficient capabilities to implement a comprehensive sanctions regime against Iran, a country that is skilled at evading sanctions. The president also lacks the patience to wait for such policies to take effect, as their effectiveness requires several months, not weeks."
Trump warned on Wednesday, "Any country that allows its financial institutions, companies, airports, or government entities to provide any form of lifeline to Iran will face severe economic consequences." Trump specifically mentioned "oil smuggling, exchange quotas, cash transfers, exchanges, ship registrations, shell companies—all of these must now cease."
Reports say that this targeted attack on the oil trade actually puts Beijing at the center of the issue, as China purchases 90% of Iran’s oil exports. Since the war began in February this year, Washington has imposed sanctions on some Chinese independent refineries, but it has not targeted large Chinese banks that provide financing for related trade transactions.
Bloomberg Economics research analyst Chris Kennedy said, “Is the White House willing to put this new economic battle above its relations with China? If it actually chooses to do so, the consequences will be severe.” Kennedy noted that these new threats also acknowledge that “the United States is running out of policy options.”
Reports suggest that if a decision is made to target China, it could also lead to countermeasures from the Chinese side, posing an impact on the U.S. economy before the mid-term elections in November. One of the key issues in these mid-term elections is the economic burden borne by the public.
Beijing has indicated its willingness to counter Trump. The most obvious example of this is the announcement of restrictions on rare earth exports, which has forced the White House to make concessions in the tariff dispute.
Atlantic Council Vice President for International Economics Josh Lipsky told Bloomberg TV, “Unless you establish some kind of international coalition, which we don’t have yet, you can’t further punish the Iranian economy, which has been punished for 40 years. I’m not sure how the United States can further control Iran financially without triggering a major countermeasure from China.”
Brett Erickson, a specialist on sanctions issues, stated: “The Trump administration cannot secure any concessions from the Chinese side with whatever conditions they might offer. This equates to requiring Beijing to willingly allow the US to dictate who China can trade with and who it cannot, which is an unprecedented request.”
Trump has focused on preventing oil sales, and oil is Tehran's main source of income. This move has had an impact. Iranian Central Bank President Abdolnaser Hemmati said to state television this week: "Under these circumstances, our oil exports have essentially come to a halt."
Despite China being the most obvious target, if the United States further pushes for isolating Iran's economy, other countries will also be at the forefront.
The UAE has always been Iran's largest trading partner, and one of the main sources of foreign goods and hard currency to Iran. However, the UAE announced this week that it would cut all economic ties with the Islamic Republic of Iran, and said that Tehran had launched ballistic missiles from its territory.
According to data compiled by Bloomberg, Turkey, an NATO ally of the United States, is Iran's second-largest export destination after China. India is also an important source of imports for Iran, especially in food and medicine. Additionally, India is a strategic partner of the United States, and Trump is seeking to negotiate a trade agreement with it.
The exchange agencies in the UAE and Iraq also help Iran to remit funds back to Iran after selling oil, and to convert the received money—usually in RMB—into currency that is usable in Tehran. However, even targeting these agencies may not be enough to force Iran to make concessions.
Even if other countries do not respond in kind, there is still doubt about whether the United States' efforts to escalate economic pressure will truly be successful. Analysts also warn that it is uncertain whether the United States can completely cut off trade links between Iran and its neighbors—including trade over land. Due to geographical proximity and deep historical ties, these trade relationships have persisted for generations.
The Chinese Ministry of Foreign Affairs has repeatedly emphasized that China opposes illegal unilateral sanctions without any basis in international law and without authorization from the United Nations Security Council. Sanctions as a means of pressure do not contribute to resolving issues. China calls on all relevant parties to take responsible measures and resolve problems through political and diplomatic channels.
