If the United States and Iran do not soon reach an agreement to end the war or extend the ceasefire that expires next week, the Trump administration is already preparing the groundwork to reorient its war effort toward a more economically focused effort aimed at suffocating Tehran into submission rather than relying solely on bombs.
Treasury Secretary Scott Bessent told media at a White House briefing on Wednesday that the United States plans to step up economic pressure on Iran, noting that the new measures will be the “financial equivalent” of a bombing campaign.
The threat of secondary economic sanctions against countries that do business with Iranian-controlled people, companies and ships — including allies like the United Arab Emirates and competitors like China — represents an escalation of sanctions the United States already has in place.
Bessent said the government has “told companies, we have told countries that if you buy Iranian oil, that if Iranian money is in your banks, we are now willing to apply secondary sanctions, which is a very severe measure. And the Iranians need to know that this is going to be the financial equivalent of what we saw in kinetic activities.”
Treasury warns China, Hong Kong, United Arab Emirates and Oman
The warning comes a day after the Treasury Department sent a letter to financial institutions in China, Hong Kong, the United Arab Emirates and Oman, threatening to impose secondary sanctions for doing business with Iran, and accusing those countries of allowing illicit Iranian activities to flow through their financial institutions.
This is part of an economic playbook that President Donald Trump can still use to pressure Iran into accepting U.S. proposals to limit its nuclear ambitions, a person familiar with the administration’s thinking told The Associated Press. The person spoke on condition of anonymity because they were not authorized to officially discuss private conversations.
Privately, the argument being made to Trump is that the Iranians believe they can weather the storm, but if they can’t pay their supporters, that could put pressure on Tehran to come to the negotiating table.
And some in the government believe there are still more economic targets that can be hit to increase the economic damage to Iran, including the bonyads, which are charitable trusts that represent a significant percentage of the Iranian economy.
Bessent told reporters that two Chinese banks have received warnings for handling Iranian money. Trump is preparing to visit Beijing next month for talks with Chinese President Xi Jinping.
Bessent also indicated that Iran’s neighbors in the Persian Gulf are now willing to consider freezing Iranian money in their banks because of Tehran’s aggression during the war.
Daniel Pickard, a sanctions lawyer, said imposing secondary penalties could trigger “diplomatic and economic fallout” from allies, which could harm efforts to build coalitions against Tehran.
“Many of our trading partners have been very explicit about their opposition to the conflict in Iran,” Pickard said. “Most economic sanctions professionals would agree that when you add more people to the team, the likelihood that economic sanctions will be effective increases.”
On Wednesday, the United States imposed sanctions on an oil smuggling ring linked to the late top Iranian security official Ali Shamkhani, who was a close adviser to Iran’s former supreme leader. The sanctions include dozens of individuals, companies and vessels involved in the secret transportation and sale of Iranian and Russian oil through front companies, many of which are in the United Arab Emirates.
“Treasury will continue to disrupt Iran’s illicit smuggling and terrorist proxy networks,” Bessent said in a statement. “Financial institutions should note that Treasury will use all tools and powers, including secondary sanctions, against those who continue to support Tehran’s terrorist activities.”
The government believes the momentum has changed
Trump administration officials have also signaled growing confidence that the ceasefire and a blockade of shipping from Iranian ports in the Strait of Hormuz have tilted momentum in Trump’s favor.
Iran has endured tens of billions of dollars in damage during the bombing to the country’s infrastructure — including hits to its oil industry, the heart of its long-isolated, fragile economy — that could take years to repair.
Vice President JD Vance said Tuesday that Trump “doesn’t want to make, let’s say, a small deal. He wants to make the big deal.”
“That’s the exchange you’re offering,” the vice president said. “If you commit to not having a nuclear weapon, we will make Iran prosper.”
The president’s deputy chief of staff, Stephen Miller, offered a more scathing assessment of the moment, suggesting that Trump had “made the checkmate move” against Iran by implementing the blockade in the strait.
“If Iran chooses the path of a deal that is great for the world, that’s great for everyone. If Iran chooses the path of economic strangulation through blockade, then the world will leave Iran behind,” Miller said in an appearance on Fox News Tuesday night. “New energy routes will be established. New supply chains will be established. Other nations throughout the region — around the world, and especially the United States — will drive the world and Iran will become a footnote.”
Some Republicans doubt the effectiveness of more sanctions
Some Republicans believe any tactic to put more pressure on Tehran is worth trying.
“I would support anything,” said North Carolina Republican Sen. Thom Tillis. “If the government came up with the ideas, I would support all of the above. The more pressure, the better.”
Others were skeptical, noting that Tehran already faced a long list of economic punishments that had little impact on its behavior.
“I’m not sure it’s sanctions that will do it. I think we’re imposing pretty tough sanctions right now,” said Mike Rounds, a Republican senator from South Dakota and a member of the Banking and Armed Services committees. “Personally, I’m not optimistic that we can really fix this without regime change.”
Trita Parsi, executive vice president of the Quincy Institute, a think tank that has criticized Trump’s decision to start the war, says that the president had been “politically cornered and strategically limited” before announcing the ceasefire. But now, he says Trump could have altered the difficult dynamic and created a situation in which “Iran now appears to need a deal more than the United States does.”
“The window that now opens offers Tehran the opportunity to convert battlefield advantage into lasting strategic gain,” Parsi wrote in a new analysis. “Letting it close would mean giving up not only incremental progress, but the possibility of reconfiguring its economic and geopolitical position. In contrast, the United States, having already secured a fragile exit ramp through the ceasefire, has less at stake in the short term.”
