Trump returns to an old weapon: Behind US's decision to economically choke Iran - analysis

Trump returns to economic pressure on Iran as UAE severs trade ties

The Trump administration is escalating its economic campaign against Iran, announcing new sanctions and reinforcing a naval blockade after months of military strikes and stalled diplomacy. President Donald Trump has called the expected actions an "economic D-Day," according to multiple reports.

Treasury Secretary Scott Bessent said the new measures will "collapse" the Iranian government, a claim reported by Al Jazeera. In a Truth Social post on Wednesday, Trump announced what he called the "most crushing economic operation" against Iran, threatening "tremendous economic consequences" for any country that provides a lifeline to Tehran through financial institutions, businesses, airports, or government entities.

Bessent told CNBC that the U.S. would apply "the toughest sanctions in history" as a "one-two punch" with the naval blockade, according to Al Jazeera. He also said the administration's economic policy had sent the Iranian currency into "free fall" and pushed inflation into triple digits, as reported by the Jerusalem Post.

The pressure campaign, dubbed "Operation Economic Fury," has been running since the war began in February, according to Al Jazeera. It includes a naval blockade on Iranian ports to prevent oil exports, as well as sanctions on companies and brokers accused of helping Iran sell oil.

Iran's response

Iranian officials have vowed to retaliate. Foreign Ministry spokesman Esmaeil Baghaei called the U.S. announcement a "complete erosion of sovereignty," according to Al Jazeera. Foreign Minister Abbas Araghchi said the measures were "bound to fail," drawing comparisons to Obama-era sanctions.

Mohsen Rezaei, secretary of Iran's Supreme National Security Council, warned of "seismic" retaliation and said any country taking part in economic restrictions on Iran would be regarded as an enemy, as reported by Al Jazeera and NPR. Rezaei also said that if neighbors participate in Trump's "economic warfare," not even a drop of oil will leave the Gulf region.

The war has taken a toll beyond the economic front. Iran has launched strikes on U.S. military installations and infrastructure in the region, according to Al Jazeera, and energy facilities in Qatar, Kuwait, Saudi Arabia, Bahrain, and the UAE have suffered damage, mostly from debris from intercepted strikes.

UAE severs trade ties

The United Arab Emirates announced an indefinite trade embargo on Iran after accusing Tehran of firing ballistic missiles toward maritime traffic, an allegation Iran denies, according to Fox News and Al Jazeera. The UAE suspended all trade, commercial exchanges, and financial transactions with Iran, with the Foreign Ministry saying the measures would remain until further notice.

According to World Trade Organization data cited by Fox News, the UAE supplied 31% of Iran's imports, valued at roughly $21 billion, in 2024, and was the destination for 13% of its exports. Miad Maleki, a senior fellow at the Foundation for Defense of Democracies, called the UAE and China Iran's "two economic bloodlines," and said the UAE's move closes a route the U.S. Navy "couldn't touch."

Iran's Baghaei called the UAE's missile accusation "baseless" and referred to a history of "false-flag operations" in the region, according to Fox News. The U.S. Treasury had earlier sanctioned Dubai-based exchange houses and trading fronts it said helped Iranian networks move hundreds of millions of dollars.

Strategy shift

According to a Wall Street Journal report cited by the Jerusalem Post, Trump adopted a "wait and see" strategy, giving sanctions and the naval blockade more time rather than launching another round of strikes. Trump's aides presented him with data showing existing sanctions had already hurt Iran, and senior officials recommended tightening sanctions further.

Trump told advisers he preferred not to order additional strikes and told reporters that "Iran is broke, completely broke." Former officials described economic pressure as the "optimal space" for the U.S., the Jerusalem Post reported.

Iran has presented far-reaching demands for reopening the Strait of Hormuz, including billions in U.S. payments, lifting the blockade, and withdrawal of U.S. forces, according to the Jerusalem Post. The sanctions strategy allows Washington to maintain pressure without immediately entering a new military round that could raise energy prices.

However, experts warned that an American blockade could worsen Iran's economy and make an Iranian response more likely, the Jerusalem Post reported. U.S. officials stressed that Trump could still change his mind, particularly if Iran responds severely.

Regional and international reactions

China's Foreign Ministry spokesman Lin Jian pushed back against the sanctions, saying pressure does not help solve the Iran issue, according to Al Jazeera. Analysts say U.S. leverage over China and Russia regarding Iran trade is limited. Iran has provided Shahed drones to Russia, and China bought 80% of Iran's shipped oil in 2025, according to data from analytics firm Kpler.

The Hindu reported that the U.S. Memorandum of Understanding with Iran expired with no extension, leaving Washington without a clear exit strategy six months after the war began. The Hindu also cited CSIS estimates that the Trump administration's actions in Iran through June alone incurred costs of approximately $40 billion.

Longtime U.S. diplomat Alan Eyre is skeptical that sanctions will change Iran's regime, saying the war has instead strengthened hardliners, as reported by NPR. Sanctions could worsen conditions for Iranians already struggling with high inflation; a 30-year-old Iranian woman told NPR that many people are buying food on credit and that medicines like insulin are increasingly unaffordable.

Perspectives

Trump administration: The new sanctions and blockade are described as the "toughest" yet, aimed at "collapsing" the Iranian government and forcing it back to negotiations without escalating military action.

Iranian government: Officials call the U.S. measures an "erosion of sovereignty" and "economic warfare," vowing "seismic" retaliation and warning regional countries against joining the pressure.

UAE: The trade embargo is presented as a response to alleged Iranian missile fire toward maritime traffic, severing a major economic lifeline to Iran until further notice.

China: Beijing opposes the sanctions, arguing that pressure does not solve the Iran issue and calling for diplomatic means.

Skeptical analysts (e.g., Alan Eyre, Simon Mabon): Some experts doubt sanctions will change Iran's regime or achieve U.S. goals, and warn of unintended consequences, including regional instability and humanitarian impact.