US Treasury Secretary Scott Bessent said on Thursday Washington will impose "the toughest sanctions in history" on Iran and urged Beijing to cooperate with the US, but China said sanctions will not help in resolving the issue.
Bessent said he would hold a press conference on Monday to discuss details.
"It is a one-two punch. We have the blockade (on Iran), and we are going to have the toughest sanctions in history," Bessent told CNBC. "It is going to work in Iran and we are going to collapse this regime."
President Donald Trump warned on Wednesday of economic consequences against any country that provided "any type of lifeline to Iran" as the US looks to resolve a war against Iran it began alongside Israel nearly six months ago.
"Regarding the Iran issue, sanctions and pressure do not help resolve the problem. China calls on the relevant parties to take responsible actions and resolve the issue through political and diplomatic means," a spokesperson for China's embassy in Washington said in response to Bessent's comments.
China buys more than 80 per cent of Iran's shipped oil, according to 2025 data from analytics firm Kpler. If the US engaged in further economic warfare with China, a major exporter to the US, including vital rare-earth minerals, it would risk retaliation.
Iran has weathered punishing economic sanctions for nearly 50 years, since the Islamic Revolution of 1979. Iranian Foreign Minister Abbas Araqchi called Trump's comments an attempt to divert American public opinion from domestic financial problems, including record debt and rising interest rates.
"I think oil markets are misinterpreting what this economic pressure means," Bessent said on Thursday. Oil prices climbed to more than three-week highs on Thursday.
"We have asymmetric information, and I'm not sure why oil has popped up on this," Bessent said. "If we are doing the maximum economic pressure, then that means that likely there will not be a large-scale kinetic restart."
When asked if the US could target China for doing business with Iran, Bessent said many conversations were best to have in private.
"We are confident that everyone wants the Strait (of Hormuz) reopened, and for energy prices to come back down," he said.
"Keep in mind that the Chinese get 50 per cent (of their) energy from inside the Persian Gulf. So it would do them a big service to get with the programme."
(Reporting by Susan Heavey, Michelle Nichols and Kanishka Singh; writing by Michelle Nichols and Kanishka Singh; editing by David Ljunggren, Rod Nickel and Chris Reese)