While the tenor of U.S.-China relations cooled somewhat from the hysteria of Donald Trump’s first term and the Joe Biden years, recent events have made clear how thin that veneer of stability remains. President Trump’s May 2026 state visit to Beijing and the planned September 24 White House meeting with Xi Jinping briefly suggested a shift toward “strategic stability.” Reciprocal visits returned to the agenda, and open talk of full decoupling subsided. That moment already looks precarious.
This week the Trump administration expanded its Iran-related sanctions campaign—“Operation Economic Outcast”—and swept up dozens of smaller mainland Chinese and Hong Kong entities involved in oil shipping, logistics, procurement, and related networks. Treasury Secretary Scott Bessent framed the package as part of an effort to sever Iran’s remaining economic lifelines after months of military pressure failed to resolve cow Tehran. Beijing responded within hours. Foreign Ministry spokesman Lin Jian denounced the measures as “illicit” unilateral sanctions with “no basis in international law,” warned that they would heighten tensions and disrupt the global economic order, and declared that China would “take all necessary measures to firmly safeguard its own rights and interests.”
This deterioration in relations after Washington moved against Beijing is regrettable and unnecessary, though frankly not surprising. Indeed, even as the rhetoric of constructive engagement passed back and forth, it did not really prevent the machinery of economic coercion from grinding forward on both sides. Restrictions on advanced technology, drones, robotics, rare earths, and other strategic goods remained in place. Washington continued to add Chinese firms to various lists; Beijing answered with its own export controls, procurement bans, and countermeasure lists.
Unfortunately, the softer language of summit coexisted with the same assumption that has driven Washington’s policy toward Beijing for years: that American security requires constraining China’s economic rise wherever possible.
To be sure, China is an authoritarian state whose leadership’s interests often diverge from those of Washington’s. But that does not make every Chinese commercial success a national-security threat, nor does it prove Beijing seeks global domination. Much of its behavior is the pursuit of prosperity, security, and regional influence—goals Washington itself pursued for decades. And for its efforts at containment, Washington’s pressure has frequently produced the opposite of its intended effect: accelerated Chinese technological self-reliance, deeper ties with Russia and other non-aligned states, and a domestic narrative that the United States seeks to keep China poor and subordinate. The cycle is self-reinforcing. Washington reads Chinese pushback as hostility; Beijing reads American containment as confirmation that a multipolar world order is unacceptable.
Washington—or rather, Trump—should wake up.
Beijing holds real leverage that Washington cannot wish away. China’s dominant position in rare-earth processing, critical minerals, and key manufacturing nodes gives it tools that bite American industry and allies far more quickly than secondary sanctions on mid-tier trading firms bite China. Youth unemployment and a slowing domestic economy are genuine problems for Beijing, yet they do not translate into leverage for Trump. Beijing has repeatedly shown it can absorb economic pain and retaliate asymmetrically—export restrictions, procurement blacklists, regulatory harassment of U.S. firms—while framing the conflict as American overreach. Domestic difficulties have not forced Xi to accept Washington’s preferred terms; if anything, external pressure strengthens the Party’s narrative of resilience under siege.
The Iran campaign illustrates the danger most clearly. China remains the largest purchaser of Iranian oil. Pressuring Beijing to abandon those purchases, or expanding secondary sanctions from smaller intermediaries to major Chinese banks or refiners, will not produce a more compliant Tehran. It risks converting an already costly Middle East confrontation into a fresh source of bilateral friction at the precise moment when both sides claim to seek stability and an end to conflict. One plausible side-effect is already visible in the diplomatic calendar: the September 24 White House visit, intended as the reciprocal high point after Trump’s Beijing trip, now hangs under a cloud. Beijing has every incentive to signal displeasure by postponing, narrowing, or canceling Xi’s travel if it concludes that Washington is simply exporting its Iran policy into the China relationship. Even if the meeting proceeds, the atmosphere will be colder and the deliverables thinner.
Great-power diplomacy does not require resolving every disagreement. It does require the ability to compartmentalize them. Washington’s simultaneous economic campaigns against Iran and against Chinese commercial actors make compartmentalization harder, not easier. The result is less strategic stability and more tit-for-tat escalation that neither side fully controls or wants.
None of this requires naïveté about the Chinese Communist Party. It requires recognizing that Washington cannot micromanage the energy purchases, technology policies, and commercial choices of a peer competitor halfway around the world without inviting reciprocal coercion. China is not disappearing. Relative power continues to shift in a multipolar direction. Washington’s post-unipolar habits of militarized economic pressure and maximalist demands are poorly suited to this reality.
A more stable relationship would begin with accepting that China will not be defeated or subordinated on American terms, and that peaceful coexistence, mutually beneficial commerce, and a narrower definition of vital interests are the realistic alternatives to perpetual friction. The late-August sanctions round and Beijing’s swift vow of retaliation suggest that path is narrowing, not widening. Whether the September summit survives intact—or becomes the a casualty of Washington’s merging of its Iran war and China policy—will say more about the future of the relationship than any communiqué.
