Can Trump's economic war against Iran do what airstrikes and negotiations couldn't?

U.S. Treasury Announces Sanctions Push Against Iran as Conflict Continues Over Nuclear and Shipping Issues

Vehicles drive past a billboard with an illustration showing the Strait of Hormuz and an image of President Trump in a square in downtown Tehran, Iran, May 2.

Vahid Salemi/AP

When the U.S. and Israel began military operations against Iran in February, President Trump stated the goal was a rapid resolution. Nearly six months later, following the expiration of a 60-day ceasefire period without a final agreement, the U.S. remains involved in an extended conflict. The fighting has affected global energy markets, strained relations with some Gulf states, and reduced U.S. munitions stockpiles. It has also altered the administration's stated objectives, which began with limits on Iran's nuclear program, later emphasized leadership change, and now focus on securing open passage through the Strait of Hormuz.

Against this background, U.S. Treasury Secretary Scott Bessent announced on Monday a sanctions effort intended to cut financial channels supporting the Iranian government. Bessent stated that the measures would continue until Tehran had no remaining external economic support. He warned countries maintaining trade ties with Iran that they could face similar restrictions. Previous U.S. administrations, including the first Trump term, have used sanctions to limit Iran's revenue. Iranian authorities have responded with smuggling networks and alternative payment systems, according to prior Treasury reports. Analysts continue to assess whether additional sanctions will alter Iranian government decisions.

Esfandyar Batmanghelidj, chief executive of the London-based Bourse & Bazaar Foundation, which studies Iran's economy and has argued against broad sanctions, said past maximum-pressure efforts have produced strong counter-measures from Iranian officials. He added that new actions could prompt Iranian leaders to increase regional activities to demonstrate resistance to external demands.

Isolation measures and regional responses

After initial exchanges of fire, Iran's Islamic Revolutionary Guard Corps conducted missile strikes on targets in several U.S.-aligned Gulf states. Iran has faced economic consequences from those actions. The United Arab Emirates, previously Iran's largest export market with roughly $21 billion in goods in 2024 according to World Trade Organization data, has stopped all trade and financial dealings with Iran. The UAE had previously served as a route for some Iranian transactions.

Miad Maleki, a former senior Treasury official now affiliated with the Foundation for Defense of Democracies—a research organization that advocates stricter sanctions on Iran and maintains connections to U.S. and Israeli security circles—said regional governments are tightening rules that Iran has used to evade restrictions. He described the overall sanctions-evasion environment as becoming more difficult for Iranian entities.

Former Treasury officials and independent analysts note that the effectiveness of the new campaign depends heavily on cooperation from major trading partners, particularly China. Shortly after President Trump's August 19 statement on Truth Social pledging an intensified economic effort against Iran, a Chinese Foreign Ministry spokesperson said Beijing opposes unilateral sanctions and believes pressure alone will not resolve the situation.

Data from a March report by the U.S.-China Economic and Security Review Commission showed that in 2025 China imported an estimated $31 billion worth of Iranian crude oil, representing nearly 45 percent of Iran's government revenue. In July, Secretary Bessent reported that those imports had fallen about 40 percent from pre-conflict levels due to the U.S. naval presence in the region. It remains unclear whether China will reduce purchases further or whether the United States will apply penalties if imports continue. Beijing has drawn on strategic reserves in the interim.

Adam Szubin, who directed Treasury's Office of Foreign Assets Control for nearly a decade, observed that recent U.S.-China discussions on semiconductors and rare-earth minerals have produced a period of reduced tension. He said both governments appear interested in avoiding further escalation and that private talks are likely addressing the extent of any Chinese steps.

Richard Nephew, who served as the lead sanctions expert on the U.S. team for the 2015 nuclear agreement, stated that imposing sanctions on large Chinese firms would be necessary for the policy to have full effect. He noted that such steps could affect prospects for a broader U.S.-China trade arrangement, but added that the naval measures already in place continue to reduce Iranian oil revenue regardless of additional Chinese compliance.

At the Monday press conference, Secretary Bessent said no country or entity is exempt from U.S. sanctions but did not name China or list specific new designations. The announcement did not include details of particular companies, banks, or transactions targeted by fresh enforcement actions.

Conditions inside Iran

Residents in Tehran report ongoing difficulties from the combination of the naval measures and long-standing sanctions. One 40-year-old woman working in baking and catering described cases in which neighbors could not obtain cancer medication or hospital admission because of equipment shortages. She said her own bank account had been frozen with approximately $1,000 unaccounted for, which bank staff attributed to a cyber incident without identifying the source. A recent purchase of basic household items totaled about $30, a significant share of the average monthly minimum wage of roughly $100.

Majid-Reza Hariri, head of the Iran-China Chamber of Commerce, told the Iranian news site Khabar Online this month that Iran cannot sustain the loss of maritime routes. He noted that container shipping costs have risen from $3,000 to $12,000 since the start of the naval operations.

Iran's new security chief Mohsen Rezaei stated on state television that Iran would respond to countries participating in the sanctions effort by targeting tankers on routes outside the Strait of Hormuz, with the aim of halting regional oil exports.

Foad Izadi, an analyst based in Tehran who has expressed support for the Iranian government, said Iranian officials view their regional leverage as sufficient to prevent a return to previous economic conditions and that continued pressure could lead to broader disruption affecting all parties in the region.

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