THE NEW YORK TIMES: US unveils campaign to cripple Iran’s economy as potential China sanctions loom large

The Trump administration on Monday announced what it called its most comprehensive assault to date on Iran’s economy, unveiling a package of measures that are intended to isolate Iran from the rest of the world.

The move is a shift by the United States in favour of confronting Iran with economic warfare as negotiations to end the military conflict continue to sputter. The war with Iran remains a drag on the global economy, one that has pushed energy prices higher and eroded President Donald Trump’s approval ratings.

The Trump administration has billed the effort as the coming of an economic apocalypse for Iran. But the announcement on Monday did not make clear how the measures would further disrupt Iran’s economy or whether they would be severe enough to get Iran to end its nuclear program and allow oil to move freely through the Strait of Hormuz.

Mr Trump, who carried out a “maximum pressure” campaign against Iran during his first term, enacted a package of measures called Operation Economic Fury aimed at Iran earlier this year. On Monday, Treasury Secretary Scott Bessent characterised the announcement as D-Day, but later acknowledged it was more of a warning shot that would begin a period of “quiet diplomacy” with counterparts around the world.

Speaking at the Treasury Department, Mr Bessent labelled the initiative Operation Economic Outcast, and vowed that the United States would “tighten the noose” around Iran by imposing sanctions on every source or facilitator of its revenue. The campaign is intended to exert pressure on other countries, including potentially China and Russia, that continue to trade with Iran or help it evade US sanctions.

“This is a sustained campaign to collapse every last option for Iran,” Mr Bessent said.

“The campaign we begin today will gather force with every day that follows, and it will not end until this regime stands alone.”

The new Iran sanctions include more than 60 entities, individuals and vessels around the world that allow Iran to procure nuclear and missile technology, Mr Bessent said. The Treasury Department is also imposing sanctions on Iran related to digital assets, gold and the aviation sectors that Iran uses to help finance its economy.

Mr Bessent said waves of additional sanctions, including on a large financial institution, would be announced in the coming days and weeks.

Much of the work of isolating Iran, he added, will take place through private negotiations with other countries to compel them to cut ties with Iran. The Treasury secretary said the United States did not have a set timeline for such talks, but that it did not have “infinite patience.” The threat of the new sanctions already appeared to be yielding results, with the United Arab Emirates announcing last week that it is halting all trade and financial transactions with Iran.

The United States has a unique ability to use sanctions as a diplomatic tool because of the status of the dollar as the world’s reserve currency. Because the dollar is used in most of the world’s financial transactions, the Treasury Department has the ability to cut individuals and businesses off from much of the global financial system. However, overuse of these tools has the potential to push countries away from using dollars and could create chaos across the world economy.

Mr Bessent suggested that the United States was giving other nations an opportunity to sever their relationships with Iran before embarking on broader “secondary” sanctions.

“We are giving everyone the opportunity to remedy bad behaviour,” Mr Bessent said.

In an acknowledgement that a barrage of new sanctions aimed at countries around the world could have unwanted consequences, Mr Bessent added: “Why would I want to blow up the global financial system?”

The most complicated of the diplomatic negotiations will be with China, which is the largest buyer of Iranian oil and has a financial system that is largely insulated from the threat of US sanctions. Asked about sanctions on Chinese banks, Mr Bessent said, “No one is above the reach of US sanctions” but did not address China specifically.

The United States is in a fragile trade truce with China and its president, Xi Jinping, is expected to meet with Mr Trump next month. The Treasury Department has imposed sanctions on independent Chinese refineries that buy Iranian oil, but it has refrained from imposing large-scale sanctions on Chinese financial institutions that facilitate such transactions.

“Until we see actions against more meaningful countries and companies continuing to trade with Iran, it’s just words,” said Daniel Tannebaum, a partner at Oliver Wyman and senior fellow at The Atlantic Council.

“Ideally quiet diplomacy is playing out between Mr Trump and Mr Xi to make a deal to pull China from Iran, but that’s a big question in terms of how much influence President Trump has there.”

Iran’s Foreign Ministry said Monday that Iran would not bow to an escalating pressure campaign by the Trump administration, after one of the country’s top security chiefs threatened reprisals against countries that joined the United States’ “economic war.”

Esmaeil Baghaei, the Foreign Ministry spokesperson, said Monday that the Trump administration was merely “repeating methods that have proven unsuccessful” in the past.

“Iran will certainly use all multilateral capacities to counter economic sanctions,” he told reporters at a news conference. Ordinary Iranian civilians, he added, would bear the cost of US sanctions.