US President Donald Trump’s administration is facing a difficult test in its effort to use sanctions and financial pressure to force Iran into concessions, as Washington threatens unprecedented economic measures against countries and entities that continue doing business with Tehran.
Writing in The Atlantic, Vivian Salama argued that the Trump administration is effectively exposing the limits of its own ability to use economic sanctions against Iran, despite the aggressive rhetoric accompanying Washington’s latest measures aimed at strangling the Iranian economy and pressuring countries that continue to engage with Tehran.
Salama noted that as soon as US Treasury Secretary Scott Bessent unveiled the administration’s latest tools for achieving what he described as the “economic strangulation” of Iran, he also revealed why Washington remains reluctant to use them to their fullest extent.
At a Treasury Department press conference on Monday, Bessent announced that secondary sanctions, which target countries, individuals or entities that conduct trade with Iran, were ready to be implemented. Yet he deliberately avoided naming the most prominent states that continue to support the Iranian economy, particularly China and Russia.
Bessent was then asked why Washington was merely threatening sanctions rather than enforcing them directly, especially after Trump warned last week of economic warfare “on an unprecedented scale” if Iran failed to meet US demands.
“Why would I want to destroy the global financial system?” Bessent replied, explaining that the administration had decided to give countries an administrative grace period before imposing the measures.
At the same time, he described secondary sanctions as an “extremely effective tool”. Salama, however, noted that the Trump administration has repeatedly offered detailed explanations of what its military and financial tools could achieve, only to later refrain from using them or postpone their deployment.
Trump at one point threatened to erase Iran as a civilisation. Salama argued that such warnings may be intended to intimidate adversaries, but failure to carry them out also exposes the increasingly limited options available to Washington in dealing with Tehran.
Sanctions Have Not Produced Surrender
Salama said the prospects of ending the war are gradually diminishing, while the list of military targets that can still be effectively struck continues to shrink and ammunition stockpiles are also declining.
At the same time, economic tools that were supposed to achieve what missiles could not, including sanctions, blockade measures and financial pressure, have failed to force Iran into the kind of surrender Washington had promised.
Iran has suffered major military and economic losses, Salama wrote, but it has not lost its ability to continue fighting. Meanwhile, the countries on which the US pressure campaign depends, particularly China and Russia, have shown little willingness to help Washington complete that objective.
Shortly after returning to the White House, Trump announced that he would “restore maximum pressure” on Iran and ordered his administration to tighten sanctions and work to reduce Iranian oil exports.
Eighteen months later, Bessent is now promoting what he has described as the “toughest sanctions in history”, continuing a maximum-pressure policy that appears to require yet another round of pressure whenever the previous one fails to achieve its stated goals.
Salama noted that this followed Trump’s announcement last June that Iranian nuclear facilities had been destroyed, and his declaration in February of a war that he said was intended to eliminate Iran’s nuclear capabilities.
In a post on Truth Social last week, Trump hinted at what the next phase would involve, warning that any country allowing its financial institutions, companies, airports or government bodies to provide any form of support to Iran would face “severe economic consequences”.
Trump added that oil smuggling, currency-swap arrangements, money transfers, exchange companies, shipping registries and shell companies must all stop “now”.
Salama argued that the warning was intended to force the entire global financial system to reconsider its relations with Iran. Bessent then issued threats of similar severity, while simultaneously identifying one of the main reasons the administration was reluctant to impose them immediately: the assumption that targeted countries would not comply voluntarily.
China and Russia Remain the Hardest Obstacle
According to Salama, this places the US administration in an extremely difficult position.
The war has lasted far longer than Trump expected, while its economic consequences have become a central political issue as the US congressional midterm elections approach.
US sanctions have damaged the Iranian economy over many years, but they have not produced the outcome Washington seeks. China continues purchasing Iranian oil, while Russia and other oil-producing states benefit from the depletion of resources caused by prolonged US military operations in Iran, as well as disruptions to energy exports from the Arabian Gulf.
Asked specifically about China, Bessent insisted that “no one is immune from US sanctions”.
Salama, however, noted that neither China nor Russia may be prepared to comply with the Treasury secretary’s demands.
The Russian Embassy in Washington did not immediately respond to a request for comment. A spokesperson for the Chinese Embassy said in a written statement that sanctions and pressure tactics do not help resolve problems.
The Chinese spokesperson called on all parties to “act rationally” and avoid steps that could escalate tensions or harm global economic growth and financial stability, adding that Beijing would continue monitoring developments and take the necessary measures to protect its legitimate rights and interests.
At the same time, Salama noted that Washington’s threats have already produced some results. The United Arab Emirates announced last week that it was halting all commercial and financial transactions with Tehran.
Asked about the Emirati decision, Bessent suggested its timing was not coincidental, saying Trump had been speaking directly with world leaders to deliver his personal warning over continued dealings with Iran.
Sanctions Could Shake the Global Economy
Salama stressed that while the United States has the power to increase the cost of doing business with Iran, it cannot ignore the wider consequences of doing so.
She sought to gauge the level of concern among officials from different parts of the world over Washington’s threats to inflict “economic destruction” on countries that fail to comply with US demands.
An Arab official told her that he hoped “those countries” would take the warnings seriously, without explicitly naming China or Russia.
A European official was more cautious, saying only, “We’ll see”, before quickly shifting the conversation towards Trump’s trade wars with US allies, an issue that appeared to command far greater European attention.
Salama argued that Bessent may have been showcasing Washington’s power, but his caution over imposing secondary sanctions comprehensively is understandable.
Jason Prince, a sanctions lawyer at Washington firm Akin Gump who previously served as an attorney at the US Treasury, said the measures are “extremely effective”. He added, however, that merely announcing secondary sanctions amounts to an economic gamble and could produce a “chilling effect” extending far beyond Iran.
Bessent also announced immediate sanctions on around 60 Iran-linked entities, individuals and vessels, accusing them of connections to Iran’s nuclear and missile programmes, cyber activities and oil shipments.
He said the first major secondary sanctions against a “financial institution” would likely be announced, “by the end of this week”.
Prince said the move would be an important test of the administration’s credibility.
Washington, he argued, must take some form of concrete action or the targeted side will have little reason to reduce its exposure or change course.
The Cost of Sanctions for Washington
Prince noted that the United States took similar measures against Russian banks after Russia’s invasion of Ukraine in 2022.
However, he pointed out that Sberbank, Russia’s largest bank, was initially placed under a less severe sanctions regime, reflecting in part the potentially global consequences of targeting a financial institution of that scale.
Stricter sanctions on Russian banks came later as Russian attacks on Ukraine continued.
Prince argued that the fundamental problem with secondary sanctions is that they also make the United States more vulnerable at a time when the US economy is already under pressure.
Technology, manufacturing and the financial sector would be among the industries most affected, he said, while oil and petrol prices have already risen and inflation remains a problem for Americans.
Salama wrote that US voters are increasingly dissatisfied with a war they had been told would make the country safer.
Public support for US military action against Iran has fallen to its lowest level since the early days of the conflict, with only 31 per cent supporting American military action against Tehran, according to a recent Reuters/Ipsos poll.
Trump’s own approval rating has also fallen to an all-time low, according to the same poll.
With the midterm elections approaching, Salama argued, Republicans are therefore less likely to welcome another round of domestic economic hardship, much less the possibility of a global financial crisis resulting from the measures being discussed by the Treasury Department.
An Attempt to Find a Way Out of the War?
Regional experts who spoke to Salama said Washington’s latest sanctions threats appeared less like a strategy for escalating the war and more like the Trump administration’s latest attempt to find a way out of the conflict.
The administration, she wrote, continues searching for an even greater threat after the previous one failed to produce either a decisive victory or even a face-saving exit.
The pattern has become increasingly clear: deadlines are changed, threats are followed by grace periods, and “maximum pressure” is followed by still more “maximum pressure”.
Salama argued that the central question is no longer simply how Washington intends to force Iran into negotiations. It is increasingly about how the United States can extract itself from a war in which its options appear limited.
Leverage, she added, depends not only on possessing the ability to punish an adversary but also on being willing to use that ability.
Washington has repeatedly announced deadlines and then changed them, threatened consequences and delayed their implementation, and unveiled tools of pressure before quickly explaining why they cannot be used in full.
That, Salama argued, may encourage US adversaries to see the limits of American power rather than fear its strength.
‘Economic Victory Day’
Salama noted that Bessent threatened to establish a sanctions regime so severe that countries around the world would be forced to choose between conducting trade with Iran and maintaining access to the US dollar-based financial system.
Bessent and Trump described the announcement as “Economic Victory Day”.
Salama argued that the comparison was inaccurate, noting that the actual D-Day operation of 6 June 1944 was a real military operation carried out without an advance public announcement or warning to the enemy about what was coming.
By contrast, the initiative formally named by the Trump administration as “Operation Economic Outcast” included a warning to countries while simultaneously signalling that the United States did not intend to go as far as it possibly could.
Bessent told reporters that Washington saw value in preparing conditions and giving parties an opportunity to recover, but stressed that they should understand that measures would come quickly and that the administration was serious.
If they were unwilling to meet US expectations, he said, they should expect to be removed from the dollar system.
Salama argued that even at this stage, Washington appears to be discovering that announcing “maximum pressure” is far easier than actually imposing it.
Iran has been under US sanctions for decades. Those measures have undoubtedly inflicted major damage on the Iranian economy, but they have not brought Tehran to the negotiating table to pursue a lasting peace with Washington.
When Iran entered the nuclear agreement known as the Joint Comprehensive Plan of Action during Barack Obama’s administration, Tehran received relief from US secondary sanctions in return.
Prince said secondary sanctions could restore some of Washington’s leverage, arguing that historical precedent suggests that the greater the pressure generated by secondary sanctions, the greater the leverage the US government believes it has over Iran.
Steve Hanke, professor of applied economics at Johns Hopkins University, offered a much more pessimistic assessment.
Hanke told Salama that the economic record so far shows that sanctions against Iran have been a “complete failure”.
Hanke, who previously served on President Ronald Reagan’s Council of Economic Advisers, said the vast number of sanctions imposed on Iran since the 1979 Islamic Revolution was enough to demonstrate the point.
In his assessment, those sanctions failed to achieve their declared objectives, and the new measures being promoted by the Trump administration as “Economic Victory Day” would ultimately meet the same fate.
Salama concluded that the US military campaign failed to deliver the rapid solution Trump had promised.
The economic campaign now risks producing the same outcome, while adding to the domestic costs of the war and increasing the pressure placed on the American economy.
