The US Treasury Department was expected on Monday to broaden the scope of secondary sanctions it can impose on entities and countries that maintain business ties with Iran as the Trump administration seeks to increase economic pressure on Tehran, a source familiar with the plans said.
The action is aimed at giving a final warning to countries to sever their business ties with Iran in an effort to force an end to the nearly six-month conflict that has bottled up the Strait of Hormuz and Gulf energy exports, said the source.
The source said Treasury Secretary Scott Bessent also intended to provide a broader overview of an economic pressure campaign against Iran that he and President Donald Trump have described as an “economic D-Day”, and would make it clear to countries that they must side with the US or risk having key companies and entities cut off from the dollar-based financial system.
Trump’s war in Iran, which has pushed energy prices higher worldwide, is about to hit its six-month mark. While heavy fighting has subsided, diplomatic efforts to end the war have stalled and oil and raw material shipping through the Strait of Hormuz remains blocked, keeping energy prices elevated.
The US has maintained sanctions against Iran for decades, most of which have been aimed at curtailing the country’s oil revenues, aviation sector, cryptocurrency, procurement of weapons components and other military hardware, and cutting off funding for business enterprises controlled by the Islamic Revolutionary Guard Corps, a dominant force in the Iranian economy.
A senior administration official said Bessent is expected to warn that any remaining financial lifelines, including through banks and third countries that have tolerated certain activity, must be shut down.
IMPACT ON RELATIONS WITH CHINA
The Treasury in recent months has sanctioned independent Chinese “teapot” refineries for purchases of Iranian oil and expanded its targeting of the shadow fleet of tankers transporting Iranian oil.
A much more powerful tool is the authority to sanction banks in China and other countries that are facilitating transactions with Iran, a step that the Trump administration has so far been unwilling to take amid a delicate trade truce with Beijing.
With Trump and Chinese President Xi Jinping scheduled to meet in Washington in late September, new sanctions on Chinese banks could sour prospects for extending a deal struck last November to keep Chinese rare earths flowing and cap US tariffs.
The US blockade of Iran’s ports has already curbed Chinese offers to purchase Iranian crude, Reuters reported on Friday, which may lessen the impact of secondary sanctions on China.
The US and Iran have not conducted air strikes on each other’s militaries for weeks, but their last official face-to-face talks to end the six-month-old conflict took place in June and strikes on vessels in the Strait of Hormuz have continued.
Iran has been bracing for the sanctions for days, issuing a series of statements hinting at a major military response.
Mohsen Rezaei, Secretary of Iran’s Supreme National Security Council, said further penalties would simply trigger a tighter squeeze on shipping through the Strait of Hormuz.
Iran entered the war with high inflation and energy shortages and must now contend with disrupted trade, lost production and the cost of rebuilding damaged infrastructure. – Reuters
