China and Iran have been pushing the de-dollarization agenda and US President Donald Trump is tackling the issue through sanctions. Trump’s first sanctions against Iran targeted three vessels carrying Iranian crude oil to China. The sanctions include one very-large crude carrier (VLCC) and two Aframaxes, reported the US Treasury Department. In addition, Trump sanctioned several entities and individuals involved in the crude oil trade between the two countries.
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Therefore, the sanctions will make it harder for China to accept Iranian crude oil when it reaches the shores. Trump also warned that if China accepts the crude oil from Iran, they will not be allowed to conduct business in the US. Both China and Iran have been the frontrunners of the de-dollarization agenda and Trump is taking the bull by the horns.
“I told China and other countries, if you buy from Iran, we will not let you do any business in this country and we will put tariffs on every product you do send in of 100% or more,” said Trump. Sanctions are the only way to tackle de-dollarization as it would affect the imports and exports sector of the country. The President has already imposed 10% tariffs on China early this month.
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De-Dollarization: Trump Tackles the Issue With Tougher Sanctions
Pressing sanctions on trade will make it harder to push the de-dollarization initiative as businesses will have to splurge more on getting their goods to reach US consumers. “A Trump victory may see the US enforce sanctions against Iran, thereby reducing Iranian oil exports and prompting oil prices higher,” said Vivek Dhar, a Commodities Strategist at the Commonwealth Bank of Australia.
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Iran’s economy is under pressure and the new sanctions will make it tougher to conduct business with its ally China. If it fails to sell its crude oil, its GDP will be impacted leading to financial turmoil. However, China, Iran, and Russia will continue advancing the de-dollarization agenda as their economy needs local currencies to thrive.