China vows payback for US Iran sanctions, testing stability ahead of Xi-Trump summit

China has vowed retaliation against new US sanctions targeting Chinese entities involved in trade with Iran. The US sanctions, announced on Monday, aim to economically pressure Iran amidst an ongoing conflict. China's foreign ministry spokesman dismissed the sanctions as "illicit" and disruptive to the global economic order. This development threatens to destabilize the recent stability in US-China relations and could become a flashpoint ahead of President Xi Jinping's upcoming visit to the US. Observers suggest that ongoing dialogues, such as a recent Track 1.5 dialogue, may help manage tensions and foster mutual understanding of concerns.

China has stated it will safeguard its interests following new U.S. sanctions targeting Iran and entities involved in its trade. Chinese Foreign Ministry spokesperson Lin Jian rejected the expanding U.S. pressure campaign, calling for an end to unilateral measures and emphasizing that cooperation with Iran adheres to international law. Beijing, a significant customer of Iranian oil, has repeatedly advocated for a ceasefire, arguing that U.S. sanctions will not resolve the Middle East conflict. The U.S. Treasury Secretary indicated that no entities are exempt from sanctions, while analysts suggest threats against Chinese entities may face diplomatic and legal challenges.

China has stated it will protect its interests after the US announced plans to expand economic sanctions against Iran and its trading partners, including Beijing. China's foreign ministry spokesman Lin Jian expressed firm opposition to what he termed "illegal unilateral sanctions" and vowed to take "all necessary measures" to safeguard its rights. This follows US Treasury Secretary Scott Bessent's announcement of new measures, warning that nations financially partnering with Iran would face isolation. China is Iran's largest oil buyer, and while this trade has decreased due to US port blockades, Beijing maintains its cooperation with Iran is within international law and should not be disrupted. Bessent indicated that banks and businesses refusing to cut ties with Iran would share in its isolation, emphasizing that "no one was above the reach of US sanctions."

Iran has vowed retaliation against any nation cooperating with fresh US sanctions, which the US Treasury Secretary described as a significant financial offensive. In anticipation, the UAE, Iran's largest Middle Eastern trading partner, announced an end to trade with Iran, a move Tehran believes was coordinated with Washington. The US plans to impose secondary sanctions on countries trading with Iran, testing whether nations like India, China, and Russia will risk US reprisals. China has previously opposed unilateral sanctions and directed firms to ignore US warnings. Despite past US pressure campaigns, Iran has survived. Iran's security chief threatened an "earthquake-like" retaliation and warned Gulf neighbors against joining the US sanctions, stating that oil exports from the Persian Gulf would cease if they participated.

The US is threatening unprecedented economic sanctions against Iran, aiming to collapse its government. President Trump announced a "most crushing economic operation" and warned that any country doing business with Iran will face "tremendous economic consequences." Treasury Secretary Scott Bessent stated these will be the "toughest sanctions in history" and that countries must choose to be "with us or against us." Iran has decried these measures, particularly those targeting other nations, as an "erosion of sovereignty" and a return to colonialism. Tehran has also threatened retaliation against any country that joins the US in imposing economic restrictions, calling them an "enemy."

President Donald Trump is implementing new sanctions and economic pressure on Iran and its trading partners, aiming to force Tehran to accept a deal on US terms. This strategy, which includes a naval blockade and economic isolation targeting nations like China and India, is intended to achieve what military actions could not. However, Iran's Islamic Revolutionary Guard Corps, which controls the Strait of Hormuz and has conducted drone attacks, may be resistant to this pressure. Experts suggest that significant economic pressure could prompt Iran to retaliate with military strikes across the Gulf, potentially targeting energy infrastructure to increase oil prices and the cost of the US effort. This retaliation could force a shift in the US approach, as Iran has demonstrated resilience to previous sanctions and military actions.

Iran has warned that any country joining the United States' "economic war" against it will be considered an enemy and face retaliation. Mohsen Rezaei, secretary of Iran's Supreme National Security Council, stated that nations participating in economic restrictions will be targeted, and warned that oil exports from the Gulf region could be halted. This warning comes as the US plans to announce new sanctions. Iran's strategy involves initial negotiations, followed by strikes against the interests of non-compliant countries. The article suggests Iran is employing a doctrine of preemption and disproportionate retaliation to deter threats.

Iran's President Masoud Pezeshkian stated that the world has accepted Iran's victory in its conflict with the United States, asserting that the U.S. is now "hated." These remarks come as the Trump administration continues its "economic D-Day" campaign against Iran, aiming to isolate the country and force concessions on its nuclear program and the Strait of Hormuz. Separately, U.S. Ambassador to Turkey and special envoy for Syria, Tom Barrack, commented that Israel "still" occupies the Golan Heights in violation of UN resolutions. This statement appears to contradict the official U.S. position, which recognizes Israeli sovereignty over the territory, a stance also adopted by Colombia. Barrack's comments drew criticism from a conservative activist.

Iranian President Masoud Pezeshkian stated on Friday that it is time to end the ongoing Middle East war with the US, asserting that Tehran is in a stronger position. He believes ending the conflict now, while in a position of power, is preferable. Pezeshkian also defended a June memorandum of understanding with the US, arguing it does not represent a defeat for Iran. The war, which began in February and involves the US and Israel, is currently in a stalemate. Iran is partially blocking the Strait of Hormuz, while the US maintains a naval counter-blockade. Pezeshkian claimed the world acknowledges Iran's victory and criticizes US actions.

The US Treasury Department has threatened shipping firms with sanctions if they pay tolls to Iran, warning that non-US persons could face legal consequences if such payments facilitate sanctions violations. This action comes as Iran has been targeting ships in the Strait of Hormuz following attacks by the US and Israel. The US has also imposed a naval blockade since April 13th, significantly reducing ship traffic through the vital waterway. The Treasury also sanctioned three Iranian currency exchange houses involved in converting oil revenue. These measures aim to pressure Iran's revenue streams, impacting global trade and humanitarian aid delivery due to increased costs and delays.

China's UN envoy, Fu Cong, criticized the United States on Friday for its "bullying" behavior, including sanctions against Chinese vessels and firms, and its role in the Iran war. This occurred as China assumed the rotating presidency of the UN Security Council. The US also imposed new sanctions on a China-based petroleum terminal operator as part of "Operation Economic Fury" to cut off Chinese funding to Iran. Fu Cong stated that sanctioning Chinese entities is unfair and that the Iran war exemplifies unilateralism and power politics, harming international law.

Iran's national currency, the rial, has hit new lows against the US dollar, trading at over 1.81 million to the dollar on Wednesday. This sharp decline is attributed to a US naval blockade and existing sanctions, which are impacting Iran's trade, particularly with China and the UAE. The currency's value has plummeted significantly over the past year, exacerbated by unchecked inflation and economic mismanagement. In response, Iranian authorities are attempting to mitigate the impact by empowering border provinces for essential goods imports and allocating funds for food purchases. The US Central Command stated the blockade has effectively cut off Iran's economic trade.

Iran is increasingly using cryptocurrencies to bypass US sanctions, with its crypto ecosystem valued at over $7.78 billion last year. This trend is driven by both citizens seeking to mitigate inflation and the government, including the IRGC, which accounts for a significant portion of on-chain activity. Cryptocurrencies facilitate transactions for oil, weapons, and imports, circumventing traditional financial restrictions. In response, the US is actively working to counter this, exemplified by Iran's recent proposal to accept cryptocurrency tolls for ships passing through the Strait of Hormuz. This has created a "cat-and-mouse game" where Iran leverages crypto to maintain economic activity, while the US attempts to block these financial lifelines.

China has formally requested the European Union to remove Chinese companies and individuals from its recently imposed sanctions targeting Russia's war in Ukraine. Beijing's Ministry of Commerce issued a warning, stating that China will implement necessary measures to safeguard its citizens and businesses if the EU does not comply. The ministry emphasized the importance of resolving concerns through dialogue and consultation, and explicitly stated that the EU would be responsible for any negative consequences arising from the continued sanctions. This demand highlights China's stance against being implicated in Western sanctions against Russia.