Trump announces punitive action against Iran’s trading partners to stifle Iranian economy
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With the aim of stifling Iran economically, US President Donald Trump announced punitive action against countries that trade with or assist Iran, as the US was left with no military options to bring Iran to its knees even after a fortnight of bombardment of Iranian targets, while US military experts warned of shortages in US stockpiles of key munitions, while Iran controls the Strait of Hormuz.
Trump warned of “tremendous economic consequences” for countries, describing the consequences as the “most crushing economic operation” ever launched against any country, and said that governments, businesses and financial institutions that help Iran with an economic “lifeline” would face those consequences.
No details were provided during Trump’s announcement about the countries and punitive actions that he targeted; however, in the wake of the midterm elections in the US, and with the war nowhere near an end even after six months, pressure mounts on the administration over the lagging costs to the US economically and militarily.
The US has increasingly turned towards economic warfare after weeks of air strikes failed to bring Iran back to negotiations, as Pentagon advisers reportedly warned Trump that the US had nearly exhausted its list of viable targets in Iran and that the military campaign was approaching the limits of its effectiveness.
US Treasury Secretary Scott Bessent has said the US would intensify efforts to isolate Iran economically, amid the Treasury’s months-long pursuit of Operation Economic Fury, apparently targeting Iran’s revenue sources through sanctions, while ensuring that oil exports from ports in Iran be halted through a US naval blockade around the Strait of Hormuz.
Meanwhile, Iran, which has been facing Western sanctions for years, has developed its own network of intermediaries to surmount the sanctions through shell companies and shadow tankers to ensure its oil trade remains intact, while Trump demanded an end to activities including oil smuggling, cash transfers, exchange-house operations, ship registries and the use of front companies.
The threat of secondary sanctions could, however, bring the US into direct confrontation with China, Iran’s largest trading partner and principal buyer of its oil, with a warning from Gregory Brew of the Eurasia Group that any new measures would inevitably have to target Iran’s trading partners, making China the most difficult and consequential target.
The prospect is particularly sensitive as Chinese President Xi Jinping is expected to visit the US next month, when the US is seeking to establish a new trading relationship with China.