Six months of military strikes and threats have so far failed to force Iran to capitulate. A naval blockade hasn’t worked, either, and now the Trump administration is counting on a new economic pressure campaign to bring the Islamic regime into line and agree to end its nuclear program and open the Strait of Hormuz.
Washington is threatening virtually any country, company, individual or financial institution doing business with Iran – but there’s a problem.
Donald Trump. Image Credit: Creative Commons.
President Donald Trump announces tariffs on auto imports in the Oval Office, Wednesday, March 26, 2025. (Official White House Photo by Molly Riley)
The more aggressively Washington applies the measures it outlined on Monday, the more economic damage it risks inflicting on itself and its allies.
Tehran knows it, and so too does Washington.
In fact, U.S. Treasury Secretary Scott Bessent said as much when announcing Operation Economic Outcast on Monday, stopping short of immediately applying the most punishing secondary sanctions available to Washington.
And with Iran still refusing to open the Strait of Hormuz, the regime may have good reason to believe that it can simply call Washington’s bluff and force President Trump to begin inflicting economic harm on his own country.
Washington Knows There’s A Limit
Scott Bessent outlined Operation Economic Outcast, which includes a series of secondary sanctions, on Monday.
It is extraordinarily ambitious. Bessent said that he intends to “sever every economic lifeline” currently sustaining Iran and pursue a “zero-leakage approach” that would leave Tehran completely incapable of rebuilding its economy.
The operation has so far seen Washington threaten secondary sanctions on everything from digital assets and technology to gold, aviation, and shipping.
More than 60 individuals, companies, and vessels have also been sanctioned.
Importantly, though, Washington did not immediately impose the harshest measures it says it is willing to take.
Bessent said that countries would be given time to comply with the new demands before being cut off from the U.S. dollar-based financial system, and when pressed on why Washington was not immediately sanctioning major institutions, Bessent acknowledged that it would cause major global problems. Specifically, he said that he did not want to “blow up the global financial system.”
It was, in effect, an acknowledgment that following through on the threats would hurt the United States, its allies, and its trading partners.
This is a major weakness in Washington’s new strategy that Tehran will unquestionably exploit.
The United States may possess enormous economic influence, but Trump can’t have his cake and eat it too.
Either Washington maintains the status quo and works to restore the global economy to pre-war conditions, or it accepts defeat, blows up the system, and suffers the consequences.
Iran is willing to take the heat, and has promised to fight for “generations” to prevent the U.S. from reshaping the country. But is Washington willing to do the same? Almost certainly not.
Iran Can Simply Call Trump’s Bluff
Tehran has already demonstrated that it is prepared to absorb extraordinary economic pain, entering the war already under sanctions and later enduring a blockade and collapse in oil exports that have deprived the government of billions of dollars in revenue.
It has suffered weakened economic activity and inflation that reached a peak of 88.6% in June. And none of it has prompted the regime to capitulate.
The calculations Washington is making throughout the conflict are vastly different from those being made in Tehran.
Iran is an authoritarian and ideological state whose leaders do not face competitive elections and therefore have less reason to respond to public anger over a poor economy or worsening living standards.
The regime has shown what it is willing to do to protesters, and regular civilians know the cost of standing up to the government.
Domestic unrest can be suppressed to ensure the regime’s survival, even if the economy hits rock bottom.
Trump does not enjoy that same luxury, and he is also only a handful of months away from a major national election. American voters are beginning to feel the economic fallout of the war, and Republicans are likely to lose control of Congress as a result.
If Iranian leaders believe that Washington cannot tolerate the economic consequences until then – or perhaps indefinitely – then their strategy will be to endure the pain and keep the strait restricted.
In fact, that’s already what the regime is telling the world.
What If Trump Follows Through?
Let’s assume that Trump follows through on his most recent threats.
Sanctioning major Chinese banks and companies would disrupt trade with the world’s second-largest economy and likely invite retaliation.
Removing what’s left of Iranian oil from an already constrained market could drive crude and gasoline prices higher, and Iran’s promise of preventing any oil from leaving the Persian Gulf would be catastrophic.
Cutting major foreign institutions out of the dollar system would also disrupt international payments and unsettle financial markets, and fuel, too.
That is precisely why Bessent is proceeding slowly and cautiously, knowing that Washington possesses the economic weapons it is threatening to use but that deploying them would cause financial chaos globally.
Tehran will therefore be asking itself: is Trump really willing to do it?
About the Author: Jack Buckby
Jack Buckby is a British researcher and analyst specializing in defense and national security, based in New York. His work focuses on military capability, procurement, and strategic competition, producing and editing analysis for policy and defense audiences. He brings extensive editorial experience, with a career output spanning over 1,000 articles at 19FortyFive and National Security Journal, and has previously authored books and papers on extremism and deradicalization.
