US Sanctions Chinese Firms Over Iran Drone Supply Chain

The US Treasury Department announced sanctions on Friday against 10 individuals and companies, some based in China and Hong Kong, for allegedly assisting Iran’s military in obtaining weapons and raw materials used to manufacture “Shahed” drones. The move marks the first such action by the Treasury, coming days before President Donald Trump’s scheduled visit to China for talks with President Xi Jinping, and amid stalled efforts to end the conflict with Iran.

In a statement, the Treasury said it remains prepared to take economic measures against Iran’s military-industrial base to prevent Tehran from rebuilding its production capacity. It also warned it would act against any foreign company supporting illegal Iranian trade, including airlines, and could impose secondary sanctions on foreign financial institutions that assist Iran, particularly those linked to private Chinese oil refineries.

Official Statements and Expert Analysis

Treasury Secretary Scott Bessent said in a statement: “Under President Trump’s decisive leadership, we will continue working to preserve America’s security and target foreign individuals and companies that supply Iran’s military with weapons for use against US forces.”

Brett Erickson, managing director at Obsidian Risk Advisors, said the Treasury’s actions aim to curb Iran’s ability to threaten ships operating in the Strait of Hormuz and regional allies. The Treasury’s Office of Foreign Assets Control (OFAC) targeted 10 individuals and companies across the Middle East, Asia, and Eastern Europe that are enabling Iran’s military to secure weapons and raw materials.

Strait of Hormuz Disruption

Iran closed the Strait of Hormuz—through which a fifth of the world’s crude oil and liquefied natural gas passes—after the US and Israel struck numerous targets in Iran on February 28. Shipping traffic through this vital waterway has nearly halted since the war began, causing a sharp spike in energy prices.