The U.S. is escalating its economic war on Iran. Here’s what that means

Iran’s top trade partners include China, Iraq, Turkey and the United Arab Emirates. But the Trump administration has not said who new sanctions would target, or how so.

By Sammy Westfall and Joshua Yang

After 10 weeks of stalled efforts to build President Donald Trump’s initial agreement with Iran into a broader deal to end the war, open the Strait of Hormuz and come to a nuclear settlement, the United States this week unveiled “Operation Economic Outcast.” The campaign of expanded sanctions and diplomatic pressure is aimed at further isolating Tehran, in part by imposing penalties on its remaining trade partners.

Nearly half a year after the U.S. and Israel launched the war, which has killed scores of senior Iranian leaders, cut off nearly all oil shipments through the Strait of Hormuz and sent the global economy reeling, Washington has reached again for one of its favorite tools in its arsenal.

Announcing the campaign Monday, Treasury Secretary Scott Bessent used forceful language, but declined to specify which countries would be targeted or when new penalties on Iran’s trading partners would take effect.

Here’s what to know about how the sanction could work, and what impact they could have.

What is the stated goal of the sanctions?

Using the analogy of the D-Day invasion from World War II, Bessent said the U.S. “in that same spirit,” would launch an “economic onslaught” against Iran’s economy and “sever every economic lifeline” that sustains its regime.

The U.S. used to be “managing the Iranian threat,” he said. Now, “we are ending it.”

Iran is already under extensive sanctions that have isolated it from much of the global financial system.

To impose still more pressure, the department said it mapped the networks, facilitators and channels Iran uses to evade sanctions and smuggle oil — and is expanding the categories of conduct that may be subject to future secondary sanctions. It also said it was privately “engaging” partners around the world to stop any Iran-related activity, before imposing broader secondary sanctions, without providing a deadline Monday. He said the U.S. would enforce a “zero-leakage” approach.

Iran’s top trading partners include China, the United Arab Emirates, Turkey and Iraq.

The goal is to give Iran a clear choice: “complete global isolation and a subsistence economy, or a path back to normalcy,” Bessent said.

When would the sanctions take effect?

Analysts said the announcement serves as little more than a stern warning until it comes into force, and its details are fully expounded.

The U.S. already had a policy of “maximum pressure” on Iran, said Richard Nephew, a senior research scholar at Columbia University’s Center on Global Energy Policy.

“If you’ve not already been” doing that, then what has the U.S. government “been doing for the last 19 months?” he asked.

In response to a question over why the sanctions were not taking immediate effect, Bessent said he is “giving everyone the opportunity to remedy bad behavior. Why would I want to blow up the global financial system?”

Bessent said Trump is privately contacting world leaders to demand that they support the U.S. in choking off Iran economically. However, he would not identify the leaders contacted or provide a deadline for action, only saying that the U.S. did not have “infinite patience.”

Bessent’s answer was one of the most “telling” things about the announcement, Nephew said. “Does that mean in six months he is prepared to blow up your international financial systems?”

“We are lacking any degree of seriousness from these guys,” Nephew added. He said he thinks that when the officials “sat down and thought about what it would be to impose” the sanctions they had in mind, they “got really scared. And said, ‘let’s just make this a warning and go from there.’”

What do the sanctions target?

The Treasury Department said it is adding five sectors of Iran’s economy to its target list: cryptocurrency used by the Islamic Revolutionary Guard Corps and regime insiders, weapons-related technologies, gold used to stabilize Iranian currency, Iran’s airlines and national shipping that carries weapons components and oil.

In addition, it announced sanctions on 60 entities, individuals and vessels that enable Iran to procure nuclear or missile technology, conduct cyber operations and sell oil.

Behnam Ben Taleblu, a senior director of the Iran programs at the Foundation for Defense of Democracies, a Washington think tank that advocates for intensive Iran sanctions, said he believes Bessent’s announcement is a “shot across the bow” and a “promissory note” with the potential to have major impact on Iran.

The emphasis is on eroding “facilitators from companies and illicit networks” and new, more “granular” determinations across sectors that have proved “more resilient” in the face of past sanctions, he said.

“If Washington goes through with this,” including enforcement against countries that deal with Iran, “it will be a measure of seriousness,” he said.

How would they work?

The Iranians have learned how to operate under a maximal U.S. sanctions effort, with banks, companies and entire industrial sectors considered off-limits to vast swaths of the international financial system.

“Everyone that they’re doing business with has accepted for years that this is a risk of doing business, and they’re okay with that, because they make a lot of money,” Nephew said. “It is not apparent to me, based on what happened today, that any of those counterparties now believes the Trump administration.”

“All those financial institutions that are thus far prepared to do business with a heavily sanctioned jurisdiction are going to continue seeing the value of doing so,” he said.

Even before the U.S. and Israel attacked Iran in February, economic frustrations worsened by international isolation drove mass protests late last year, in which millions of Iranians took to the streets, sparking a violent government crackdown. In recent months, the U.S. blockade on Iranian ports, appeared to be “taking it up a significant notch,” and the threatened sanctions would only add to that pressure, said Naysan Rafati, senior Iran analyst for the International Crisis Group.

“The Iranian government may sound bullish on their capacity to absorb the pain,” Rafati said. “But the pain is already there ... And it is going to increase across the board.”

The United Arab Emirates announced last week that it would suspend all trade and financial transactions with Iran — a trade decision that came after the UAE accused Iran of firing ballistic missiles at the Emirates, and after a call between Trump and his Emirati counterpart, Mohamed bin Zayed al-Nahyan, earlier that day.

Nephew said the UAE’s announcement is “material and significant,” but that “the devil’s in the details” on whether or not the country will execute.

How could the sanctions affect China?

Bessent did not directly address the question of whether the U.S. will cross new lines with China — the largest importer of Iranian oil — before President Xi Jinping is due for a state visit to Washington in September.

Asked whether Chinese entities that facilitate Beijing’s purchases of Iranian oil would be among those targeted, Bessent said: “no one is above the reach of U.S. sanctions.”

Monday’s sanctions are set to target a handful of firms based in Hong Kong and mainland China, but do not include large oil refineries or financial institutions.

Operation Economic Blackout is “fairly consistent” with previous sanctions on small Chinese firms, said Zongyuan Zoe Liu, a senior fellow for China studies at the Council on Foreign Relations. “I wouldn’t interpret this as a major escalation.”

Washington’s limited approach comes in part from a reluctance to open a new front in the U.S.-China trade war, said Ali Wyne, a senior U.S.-China researcher and advocacy advisor for International Crisis Group. “Given how keen Trump has been to maintain both a trade truce between the United States and China and his personal rapport with Xi, he seems unlikely to empower Bessent to target major Chinese financial institutions.”

But Operation Economic Blackout is also unlikely to deter China’s relations with Iran, given that most major Chinese institutions already refrain from violating sanctions on Iran. “I wouldn’t blame Treasury for not identifying any bigger fish, because the bigger fish ... already excluded themselves from Iranian-related trade,” Liu said.

“China has made clear on many occasions its firm opposition to illicit unilateral sanctions that have no basis in international law,” Chinese Ministry of Foreign Affairs spokesman Lin Jian said in a news conference Tuesday, adding that Beijing would take “everything necessary” to safeguard its interests.

Rachel Chason, Riley Beggin, David J. Lynch and Aoife Walsh contributed to this report.

By Sammy Westfall

Sammy Westfall is a breaking news reporter on The Washington Post's International desk.follow on X@sammy_westfall

By Joshua Yang

Joshua Yang reports for The Washington Post's international desk. Before working at The Post, he also contributed to Foreign Policy, Rest of World, the Nation and elsewhere. Send Joshua secure tips on Signal at @jqy.12.follow on X@joshuaqyang