Trump threatens Iran’s trade partners, as military strikes make way for economic pressure

Original article by Jonathan Yerushalmy

Donald Trump has announced a new campaign to isolate Iran’s economy, threatening “tremendous economic consequences” on any country that helps or does business with Tehran, a move that could set up a fresh confrontation with China if implemented.

“Today, I am announcing the most crushing economic operation ever taken against any country!” Trump wrote on Truth Social. “Any country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face tremendous economic consequences.”

His announcement however contained no detail on what actions would be taken or which countries could be affected, and comes as the war nears its six-month mark, with the president facing pressure over the cost of the conflict as the US midterm elections approach.

Last month the US president paused attacks on Iran, after a fortnight of nightly strikes that had failed to bring officials in Tehran back to the negotiating table and reports that the war has run down US stockpiles of key munitions. Pentagon advisers reportedly told Trump last month that the US had nearly exhausted its list of targets in Iran and the military campaign had reached the limits of its effectiveness.

The White House has signalled in recent weeks a shift in strategy to tightening pressure on Iran economically. US treasury secretary Scott Bessent said last week the US would begin ramping up efforts to isolating Iran economically.

The US treasury has for months been carrying out an effort, called Operation Economic Fury, aiming to cut off Iran’s funding with targeted sanctions, while a naval blockade in the strait of Hormuz has sought to block Iranian ports from exporting oil vital to keeping the country’s economy afloat.

Iran’s economy already faces a punishing array of US and western sanctions that have ground down the economy over years and curtailed its ability to sell oil. But experts say the country’s leaders have learned to adapt to the measures, including by exporting oil through a sophisticated network of shadow tankers.

In his announcement on Wednesday, Trump listed several activities that he said needed to stop immediately, including “oil smuggling, swap lines, cash transfers, exchange houses, ship registries, front companies”.

The wording of the president’s announcement suggested that he could be threatening secondary sanctions on countries that buy Iranian oil, but experts say such a move could lead to direct confrontation with China – Iran’s biggest trading partner – at a time when the US is trying to establish a new trading relationship with Beijing.

“Whatever new economic measures the US can use will need to be directed at Iran’s trading partners,” said Gregory Brew, a senior analyst at theEurasia Group, adding that it will be “hard for the US to direct such actions at China, the country that matters most to Iran’s economic future.”

Chinese leader Xi Jinping is also expected to visit the US next month, further complicating any efforts to target Beijing’s imports of Iranian oil.

Mohammad Mokhber, an adviser to Iran’s supreme leader, ​said on Tuesday that military pressure and sanctions ​would not break Iran’s resolve. He added that Iran remained open to dialogue ⁠with the US, but would not confuse negotiations with surrender, according to the semi-official ​Fars news agency.

On Tuesday, the United Arab Emirates, announced it would suspend all trade activities, commercial exchanges and financial transactions with Iran, after it said it had detected two missiles launched from the country. Tehran dismissed the reports as baseless.

Prior to the war, the UAE was one of Iran’s biggest trade partners, providing more than 30% of its imports.

Earlier on Wednesday, Trump also claimed that vessels from Gulf countries allied with the US were continuing to move through the strait of Hormuz, despite the Iranian threat to shipping in the waterway. The president said the US military was aiding ships in the strait, saying “right now, a lot of boats are coming through.”

Axios reported that US forces were facilitating the transit of 15 to 20 ships in and out of the Hormuz each night in recent weeks – carrying “roughly half the prewar volume” of daily oil shipments – while also continuing to blockade Iranian exports. Those volumes were disputed by some, with ship tracking data ‌from Kpler showing transits remained low.

Referring to the Axios report, Danny Citrinowicz, the former head of the Iran branch of Israeli military intelligence, said it was an important operational development, but questioned how long the US government would be able to sustain such an operation.

“More importantly, this will not force Iran to surrender or fundamentally change its negotiating position,” said Citrinowicz.