Why does the United States avoid confronting China over sanctions on Iran?

U.S. Treasury Secretary Scott Peters described the "economic exile" operation, which he announced launching yesterday, Monday, as an unprecedented campaign aimed at cutting the lifelines of the Iranian economy. It includes primary or direct sanctions on about 60 individuals and entities, in addition to secondary sanctions targeting companies and institutions that do business with Tehran.

Financial Times noted that any U.S. sanctions targeting Chinese firms and companies, which import roughly 90% of Iranian oil according to the newspaper, threaten to escalate the dispute between Beijing and Washington ahead of the anticipated meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping in the U.S. capital next September.

It is expected that Xi and Trump will discuss during their Washington meeting an extension of the two sides' reduced-tariff agreement for another year, a pact signed in October of last year but not renewed during Trump’s May visit to Beijing, and which holds great importance for both countries and the global economy.

Tehran possesses important leverage to respond to U.S. sanctions if they affect major Chinese entities, notably rare earth minerals, of which Beijing controls the majority of global exports. These minerals are essential for vital sectors of the U.S. economy, including technology and defense industries such as aircraft, missiles, and drones.

According to data from The New York Times, the United States relies on China for about 80% of its rare‑earth imports, while the figure rises to roughly 98% for the European Union, meaning that control over rare earths is one of Beijing’s most valuable cards should the dispute over Iran intensify.

Moreover, the extensive bilateral trade in goods and services, which reached about $495 billion in exports and imports in 2025 according to the U.S. Commercial Representative Office, means that reciprocal tariff hikes between the two countries would raise production costs in many U.S. sectors—including automobiles, technology, and electrical equipment—due to higher prices for raw materials and intermediate goods, thereby pushing up overall price levels.