Last week, President Trump threatened an economic "D-Day" to "crush Iran's shadow economy."

Today, the U.S. Treasury Secretary held a press conference to announce the start of the clock on that operation, and to threaten all countries financing the Iranian economy to either "stand with the U.S." or "share in the isolation of a withering regime."

Sanctions on Iran aren't new. What's new is the audience that falls within the net of isolation by association.

Bessent said, "No nation should expect to enjoy the rewards of our system while helping those who seek to destroy it." And he said, it's now "a time for world leaders to make a decision between prosperity and isolation, peace and terror, America and Iran."

This is addressing whoever is still buying, shipping, insuring and banking the Iranian trade.

Who fits that description?  China. 

China takes as much as 90% of Iran's oil exports.

With that, Bessent was asked directly whether Chinese banks would be targeted. He wouldn't say. He did say that "no one is above the reach of US sanctions … we know who they are. They know who they are."

Now, this "stand with the U.S." or pay a price may sound familiar, because it was the underpinning of the tariff strategy.

As we discussed in our notes, back in April of last year, the point of the tariffs wasn't revenue, it was about realignment.

Use access to the American consumer as leverage, and draw the rest of the world back toward the United States.

It worked. But not on China.

That's because the tariff strategy is ultimately about China — ending its multi-decade economic war on the world. 

Remember what Trump's Secretary of State, Marco Rubio, said in his confirmation hearing: "if we stay on the road we are on right now, in less than 10 years, virtually everything that matters to us in life will depend on whether China allows us to have it or not."

So, China hasn't made a deal on trade. It has retaliated. It has built workarounds. It has delayed.

And now the Trump administration is deploying another instrument, one that uses Iran to put China in the crosshairs.

The penalty for those funding the Iranian regime was stated plainly this afternoon. They "will be removed from the US dollar system."

So the tariffs quickly realigned most of the world. This threat against Iran enablers is to realign who's left — or isolate them.

With that, just as Venezuela has been the model for Iran — eradicate the regime, take the oil, remove the leverage — the economic isolation of Iran now presents a model for the Chinese Communist Party to contemplate. 

On that note, Bessent's language today brought this to mind: In February of last year, at the AI Summit in Paris, Vice President Vance warned a room of world leaders about siding with China on technology/AI.  He said "partnering with such regimes, it never pays off in the long term," and that doing so "means chaining your nation to an authoritarian master."

Neither Vance, nor Bessent, explicitly called out China, but the dots are easy to connect. 

Today was another warning shot, but one with enough bite to further weaken Iran, and expose China's complicity.