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Why did Washington impose sanctions on China before the Trump-Xi summit?

By Salman Rafi Sheikh – New Eastern Outlook – May 12, 2026

New U.S. sanctions against Chinese companies just before Donald Trump’s visit to Beijing highlight the growing tendency to use economic pressure as a primary instrument of American diplomacy.

Donald Trump plans to visit China from May 13 to 15. His baggage includes a load of sanctions instead of concessions. Days before his visit to China, Washington imposed fresh sanctions on mainland Chinese and Hong Kong-linked firms accused of helping Iran procure drone and missile-related components. The message is unmistakable: the United States wants to negotiate from a position of pressure. But coercion before diplomacy often produces the opposite effect. Rather than strengthening Washington’s leverage over Beijing, the move risks hardening Chinese resistance, deepening China-Iran ties, and accelerating the erosion of America’s sanctions power in an increasingly multipolar world.

Coercion as Diplomacy

The timing tells the story. On May 8, the US Treasury announced sanctions on 10 individuals and companies — several based in China and Hong Kong — accused of facilitating Iran’s acquisition of materials used in Shahed drones and ballistic missile programmes. According to the Treasury Department, some firms allegedly supplied insulation materials and procurement services linked to Iran’s military-industrial network. Reuters reported that the sanctions came just days before Trump’s scheduled meeting with Chinese President Xi Jinping in Beijing. And, just as Trump flew to China, the US imposed further sanctions on entities involved in shipping Iranian oil to China, hitting China’s energy demands.

The logic behind the move is relatively straightforward. Trump appears determined to avoid entering Beijing looking conciliatory or desperate for stabilization in US-China relations. He wants to completely dodge the impression that the US has lost in Iran. By imposing sanctions beforehand, Washington is signaling that dialogue with China will not come at the expense of American pressure campaigns against Iran or broader national security concerns. The sanctions also serve a domestic political purpose. Trump can portray himself as simultaneously engaging China diplomatically while remaining “tough” on both Beijing and Tehran.

This reflects a broader pattern in Trump-era diplomacy: negotiation through escalation. Whether on tariffs, NATO burden-sharing, or Iran, Trump has frequently relied on pressure tactics to create bargaining leverage before high-level meetings. The assumption is that economic coercion raises the costs of resistance and therefore increases the incentives for compromise. But this strategy works only if the other side believes accommodation is less costly than defiance. That assumption is becoming increasingly questionable in the case of China.

Beijing’s reaction was immediate and predictable. China’s Foreign Ministry condemned the sanctions as “illegal unilateral measures” and pledged to defend the legitimate interests of Chinese companies. Rather than creating diplomatic flexibility, the sanctions may have narrowed Xi Jinping’s room for maneuver by making concessions appear politically submissive.

This is an important point often overlooked in Washington. Chinese leaders do not interpret pre-summmit sanctions merely as tactical bargaining instruments; they typically view them as public demonstrations of coercion designed to humiliate China before negotiations even begin. In such circumstances, compromise becomes politically costly because it risks reinforcing perceptions of weakness both domestically and internationally. That dynamic is particularly significant today because US-China relations are no longer defined by strategic ambiguity or selective competition. They are increasingly viewed in both capitals as a systemic rivalry involving trade, technology, finance, security, and ideology simultaneously. In that environment, sanctions cease to look like isolated policy tools and instead become part of a broader containment strategy.

The Limits of Economic Pressure

The deeper problem for Washington is that sanctions may no longer carry the same coercive power they once supposedly did.

For decades, the United States relied on its dominance over the global financial system to compel compliance from adversaries and third parties alike. Access to the dollar system, Western banking networks, and US markets gave Washington enormous leverage. Secondary sanctions became, at least from Washington’s perspective, one of the most effective tools of American statecraft. But the geopolitical environment has changed significantly.

China today possesses far greater economic resilience than most previous sanctions targets. It also has stronger incentives to resist American pressure because compliance increasingly carries strategic costs of its own. Beijing sees Iran not merely as an isolated Middle Eastern partner but as part of a broader network of states capable of constraining US influence across multiple regions.

China remains Iran’s largest oil customer despite years of American sanctions. Under these conditions, China is unlikely to fully cooperate with Washington’s “maximum pressure” campaign against Tehran. Indeed, repeated sanctions may actually be accelerating China’s determination to build sanctions-resistant economic structures. Beijing has already expanded the use of alternative payment systems, encouraged yuan-denominated trade, and adopted legal mechanisms allowing Chinese firms to challenge or ignore certain foreign sanctions regimes. Each new round of American penalties reinforces the Chinese perception that dependence on US-controlled financial systems constitutes a strategic vulnerability.

There is also growing evidence that sanctions enforcement is producing diminishing returns. The United States has repeatedly sanctioned Chinese and Hong Kong-linked firms accused of helping Iran procure drone components over the past several years. Yet the procurement networks continue adapting through shell companies, intermediaries, and rerouted supply chains.

A 2025 report in the South China Morning Post described the process as a “whack-a-mole exercise,” noting how Iranian procurement networks rapidly reorganized after earlier sanctions targeted Hong Kong-based front companies. The persistence of these networks suggests that sanctions may disrupt transactions temporarily without fundamentally changing the underlying strategic calculations of either China or Iran.

This matters because coercive tools derive much of their effectiveness from credibility. If the targeted state concludes that sanctions are manageable, adaptable, or largely symbolic, then the deterrent value of future sanctions declines substantially.

A More Fragmented Geopolitical Order

The sanctions also reveal a broader contradiction in contemporary American foreign policy. Washington increasingly wants two incompatible outcomes at the same time: strategic competition with China and selective cooperation with China. The Trump administration appears to believe that it can compartmentalize the relationship — sanctioning Chinese entities over Iran while simultaneously seeking Chinese cooperation on trade, regional stability, or maritime security. But the relationship has become too securitized for neat compartmentalization.

From Beijing’s perspective, sanctions on Chinese firms are not disconnected technical measures. They are part of a larger American strategy aimed at constraining China’s economic and geopolitical rise. Under those conditions, even limited cooperation with Washington becomes politically sensitive inside China.

Ironically, the sanctions may therefore deepen exactly the alignment Washington seeks to weaken. China, Iran, and Russia increasingly share a common interest in reducing exposure to US-led financial and strategic pressure. They do not constitute a formal alliance, but they are moving toward greater coordination because American coercive policies create shared incentives for resistance.

This does not mean sanctions are entirely ineffective. They can still raise transaction costs, complicate procurement networks, and signal political resolve. But the era in which sanctions alone could fundamentally reshape the behavior of major powers may be fading.

The more important question now is whether Washington is adapting quickly enough to that reality. If the United States continues relying on sanctions as its primary instrument of geopolitical leverage, it may unintentionally accelerate the fragmentation of the very international order that once made those sanctions so powerful.

Trump may arrive in Beijing believing he has strengthened his negotiating hand. Yet Xi Jinping is likely to interpret the sanctions differently: not as leverage for compromise, but as evidence that Washington increasingly views pressure itself as diplomacy, and that coercion is likely to remain a key feature of US ties with China. And when coercion becomes the default language of international politics, major powers rarely move toward accommodation. They prepare instead for a world in which confrontation is permanent.

Salman Rafi Sheikh is aresearch analyst of international relations and Pakistan’s foreign and domestic affairs.

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May 12, 2026 Posted by aletho | Wars for Israel | China, Iran, Sanctions against Iran, United States | Comments Off on Why did Washington impose sanctions on China before the Trump-Xi summit?