The United States has announced its latest plan to put maximum economic pressure on Iran. Launching “Operation Economic Outcast” on August 24, the US treasury secretary, Scott Bessent, said the plan would involve the “toughest sanctions in history” against Iran.

The US objective is ambitious. To economically isolate Tehran, punish countries that continue trading with it and achieve through financial pressure what nearly six months of military confrontation have failed to deliver. Bessent said this would mean cutting any countries continuing to trade with Iran out of the dollar system.

“Any nation that serves as a financial artery of a withering regime should expect to share in its isolation,” he said. “To become a sanctuary for terror is to become, in the eyes of the United States, a global pariah.”

When asked whether the same measures would apply to China, which accounts for the majority of Iran’s oil exports, Bessent said that no country “is above the reach of US sanctions”. China, meanwhile, said it was firmly opposed to “illicit unilateral sanctions”. It has warned it will retaliate if any Chinese companies are hit by the expanded US sanctions regime.

Cutting China out of the US dollar system would be likely to cause catastrophic disruption to global markets. It would immediately curtail trade between the US and China, causing severe shortages of retail goods and medical supplies in the US and leading to sharp rises in unemployment in China as a result of factory closures. There would also be a risk that China could........

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