The US promised ‘the toughest sanctions ever’ on Iran. Here’s what Trump’s team actually delivered

After days of promising the “toughest sanctions in history”, the US announced punitive measures against Iran on Monday and threatened sanctions against Tehran’s trade partners. Treasury secretary Scott Bessent said nearly 60 Iran-linked entities, individuals, and vessels would be sanctioned as part of Operation Economic Outcast, without offering specific details on the measures. “Let there be no ambiguity as to the position of the United States,” Mr Bessent said at a press conference. He said the scheme would amount to “economic asphyxiation” on the regime and warned that superpower China – Tehran’s largest trade partner – would not be beyond its scope. “An economic engagement of any kind with this murderous regime will expose those responsible to the full reach of American power.” Iran’s finance minister, Ali Madanizadeh, said Tehran is fully prepared to retaliate, while Beijing warned that the move would only serve to “intensify” tensions and vowed to take measures to “safeguard” its interests. But experts have questioned whether Trump has delivered on his promise of an “economic D-Day” on Tehran, pointing out that the most severe and impactful measures were not actually announced. Rather, they say the operation was intended as a warning shot. What sanctions on Iran are already in place? Since 1979, US policy has been largely to punish, contain or isolate Iran and successive administrations have done so through a mix of primary, secondary and targeted financial and economic sanctions. The Joint Comprehensive Plan of Action (JCPOA), negotiated by the Obama administration in 2015, placed limits on Iran’s nuclear programme in exchange for sanctions relief. At the time, Iran’s economy was suffering under crushing inflation and surging food prices. But President Trump withdrew from the agreement in 2018 and later reimposed sanctions on Iran’s nuclear programme, oil exports, banking and financial system as part of his maximum pressure campaign. These sanctions were broadly kept in place by Joe Biden. The sanctions have forced Tehran to seek creative workarounds to keep its economy afloat. This includes the use of the “shadow fleet” shipping illicit Iranian goods, creating and selling homemade military hardware such as Shahed drones and ramping up trade cooperation with Russia and China. People shop for produce at the historic Tajrish bazaar in northern Tehran (AFP/Getty) Why secondary sanctions are so key During his press conference, Mr Bessent did not name which countries could face secondary US sanctions, saying only that the president was calling leaders to instruct them to immediately halt all trade activity with Tehran. “It’s as much a warning as it is a sanctions announcement,” says Dr Neil Quilliam, an energy policy, geopolitics and foreign affairs specialist, at Chatham House. “The US has signalled that it is prepared to widen the net around Iran’s economy and target the networks that help Tehran access global markets. The message is not only directed at Iran, but also at the countries and businesses that continue to facilitate trade with it.” But despite the symbolic significance of the announcement, Dr Quilliam says that “what matters now is enforcement”. The measures are “potentially significant” because they broaden the targets of sanctions, he says. “If Washington follows through and imposes secondary sanctions on companies, banks and intermediaries dealing with Iran, the impact could extend well beyond Iran itself,” he says. “At this stage, the announcement creates uncertainty and raises the risks associated with doing business with Tehran.” Bessent made threats, but stepped back However, analysts say that Mr Bessent held back on the most severe measures due to fears of the impact it may have on the world economy, telling reporters he did not wish to “blow up the global financial system”. Mr Trump’s war has proved unpopular with voters due to higher gas prices caused by Iran’s closure of the Strait of Hormuz. “The administration appears to have left itself room to escalate,” explains Dr Quilliam. “Bessent spoke about compliance periods and warnings rather than immediately targeting major foreign financial institutions. “The most punitive option would have been to move directly against large Chinese banks or major international companies linked to Iranian trade. The threat remains on the table, but Washington has not taken that step yet.” People shop for produce at the historic Tajrish bazaar in northern Tehran (AFP/Getty) The impact on trade between Iran and China China remains Iran’s biggest trading partner, having purchased oil from the country for years despite a US blockade affecting the flow of oil. On Tuesday, Beijing said that its cooperation with Iran should not be interfered with or disrupted and claimed that the trade relationship is conducted within the framework of international law. “China is unlikely to abandon its economic relationship with Iran because Iranian energy remains important to Chinese interests,” says Dr Quilliam. “The more important question is whether Chinese businesses, banks and shipping companies become more cautious in the face of potential US penalties. Beijing may view the announcement as political signalling, but many commercial actors will be watching closely to see whether Washington follows through with enforcement.” President Donald Trump had promised an ‘economic D-Day’ for Iran (AP) What could this mean for Iran? Iran has withstood sanctions pressures for over five decades and has become “adept at finding alternative routes for trade and finance”, says Dr Quilliam. As a result, he believes it is “unlikely to produce an immediate policy change in Tehran”. “What they could do is increase transaction costs, complicate exports and make it harder for Iran to access international markets,” he says. “The longer-term effect will depend on how rigorously the US enforces the new measures.”