US declares 'economic D-Day' against Iran

US Treasury Secretary Scott Bessent announced on Sunday that the Trump administration is entering the "endgame" in its campaign against Iran, declaring an "economic D-Day" aimed at severing Iran's economic lifelines. In a post on X, Bessent said President Trump "has dismantled Iran's military capabilities, destroyed nearly 100 percent of its military factories, and buried its nuclear program."

"We are now entering the endgame. At dawn begins an economic D-Day -- the single greatest financial offensive ever marshaled against an adversary," Bessent wrote. He accused Iran of using security guarantees as a form of "extortion," saying Tehran relied on the expectation that Iranian retaliation was certain while US enforcement could be negotiated.

"The Islamic Republic has subsisted by dressing extortion as security guarantees," Bessent said. "Under President Trump, that era is over. And those who fear the danger of defying Tehran ought not to discount the cost of testing Washington."

Bessent said Trump had created the conditions for the US government to deploy its full range of authorities against Iran, aiming to "sever every economic lifeline that sustains the tyrannical regime until Tehran stands alone." The Treasury Secretary also warned of the "toughest sanctions in history," saying Washington would pursue coordinated economic isolation and seek to "collapse this regime." He said a media conference on Monday, August 24, would reveal "exactly what we're going to do."

President Trump had announced the "Economic D-Day" campaign on Wednesday, calling it the "most crushing economic operation ever taken against any country" and urging allies to join Washington in isolating Iran. Trump said Washington had "very draconian sanctions" available and indicated that additional measures could be announced. He added that the situation could either result in a significant fall in oil prices or lead to a continuation of existing measures, depending on developments.

Iran's warnings and economic retaliation

In response, Iran's Supreme National Security Council Secretary Mohsen Rezaei warned that Tehran could halt all oil exports through the Strait of Hormuz and elsewhere in the Persian Gulf if the US "economic war" continues. Rezaei also warned that Iran would consider any country supporting or participating in the US economic campaign to be an "act of war."

Iranian Parliament Speaker Mohammad Bagher Ghalibaf ridiculed the US sanctions threat in a satirical X post, joking about "frozen imports" to fix prices and wages. "Importing frozen meat to fix meat prices. Okay, that might work. What's the plan for bonds, import frozen yields? Frozen homebuyers for housing? Frozen paychecks for wages? A frozen foreign policy delivers a frozen economy. The only thing still moving? The Iran boomerang," Ghalibaf wrote.

Iranian Foreign Ministry spokesperson Esmaeil Baghaei said war and sanctions are "not unfamiliar" to Iran, noting the country has been under sanctions for 20 years.

The escalation follows weeks of heightened tensions. As the memorandum of understanding (MoU) expired on Monday, Trump called on Tehran to raise the "white flag of surrender" but insisted he was in no rush to end the war. Since February 2025, Washington has sanctioned "more than 1,000 Iran-related persons, vessels, and aircraft," according to the Treasury's Office of Foreign Assets Control (OFAC).

Economic strain and Iran's coping strategies

Iran has been rerouting imports of food, consumer goods, and industrial inputs through land borders with Pakistan, Turkiye, and other countries, as well as through the Caspian Sea with Russia and Central Asia. During the ceasefire period under the MoU, the blockade was lifted for several weeks in late June and early July, enabling the rapid export of oil stored on board supertankers.

But the pressure is mounting. Mohammad Reza Farzanegan, professor of economics of the Middle East at Philipps-Universitat Marburg in Germany, said the naval blockade combines sanctions with military force to create a physical shortage of goods in the Iranian economy. He said Iran might choose armed conflict over a deal dictated by the Trump administration, and that the US should open a diplomatic exit.

Mahdi Ghodsi, a senior economist at the Vienna Institute for International Economic Studies, said Iran's prolonged stagnation over most of the past 15 years suggests that government policy has not been aligned with its declared objectives. He said Iran needs to reduce confrontation with the US, the West, and Israel, while pursuing domestic reforms.

Ghodsi said energy remains the most powerful source of US leverage over Iran, and if the blockade persists into autumn and winter, the country risks severe supply shortages. He said the US would likely target Iran's external energy trade, involving maritime transport, shipping services, insurance, payments, and the foreign buyers and intermediaries that keep those flows operating.

Domestic measures and structural challenges

Iran's economy faces structural issues rooted in decades of domestic corruption and mismanagement, as well as sanctions and international isolation. The country's population is roughly 90 million, and consequences include persistent inflation, insecure and poorly paid work, declining purchasing power, and growing uncertainty about the future.

President Masoud Pezeshkian's administration has named stabilising markets, protecting livelihoods, and strengthening national resilience as its priorities for the next two years. The government has also reduced some subsidised petrol quotas for personal vehicles and has been considering raising fuel costs, after an earlier increase last December.

US media outlets have reported that Washington's forthcoming measures could include sanctioning additional independent Chinese refineries known as "teapots" that buy or process Iranian crude. OFAC has already imposed secondary sanctions on smaller China- and Hong Kong-based entities processing Iranian oil money, but it could go further by designating larger Chinese banks if they touch Iran-linked funds.

Iran's authorities have said they could shift to offensive operations and are prepared to counter a potential ground invasion. US and Israeli authorities have also discussed disrupting Iran's inland imports to ramp up the pressure.