This will be fun:
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President Trump has announced to put secondary sanctions, i.e. prohibition of any commerce exchange with the U.S., on any country that imports oil or oil products from Iran.
This is just another click on the sanction ratchet. The last ones, six or so weeks ago, had no serious impact:
The tightened U.S. sanctions on Iranian oil flows under the Trump Administration’s renewed maximum pressure campaign have created chaos in Iran’s oil exports to its single biggest buyer, China.
However, Iranian exports to China, which buys around 90% of the Islamic Republic’s oil, continue as traders and middlemen rearrange tanker flows and increase ship-to-ship transfers, especially offshore Malaysia, vessel-tracking analysts say.
The latest U.S. sanctions have managed to disrupt trade as the number of non-sanctioned tankers is steadily falling. But exports from Iran to China continue at a rate similar to those of the past few months …
The original 'maximum pressure' sanctions were solely aimed at Iran:
The Trump Administration .. is actively seeking to collapse these exports – currently estimated at 1.5 million bpd-1.6 million bpd – by ratcheting up pressure on the financial system and governments in the region, which aid Iran’s oil export efforts and oil revenue collection.
“We will close off Iran's access to the international financial system by targeting regional parties that facilitate the transfer of its revenues. Treasury is prepared to engage in frank discussions with these countries,” Secretary Bessent said at the Economic Club of New York last week.
“We are going to shut down Iran's oil sector and drone manufacturing capabilities.”
That did not work as expected. The new secondary sanctions are targeting Iran's best customer – China.
I have no doubt that China, despite the threat of secondary sanctions, will continue to buy oil from Iran.
Trump already had to make carve-outs for automobile parts and other irreplaceable stuff from the sky-high tariffs he had imposed on products from China. There are also exemptions for pharmaceutical precursors and products. U.S. healthcare depends on those products from China.
As China is unlikely to give in the secondary sanctions related to Iran will make these exemptions irrelevant.
The fun part of this will come when Trump will have to retreat from it as soon as the results of his bluster threaten to hurt the U.S. economy.