The Trump administration is signaling a strategic shift towards sustained economic pressure on Iran, reinforcing its naval blockade of the Strait of Hormuz and indicating that new sanctions are forthcoming. President Donald Trump stated he is "not in a hurry" to resolve the conflict, suggesting a longer-term strategy of economic squeeze.
A 60-day memorandum of understanding aimed at laying the groundwork for an end to hostilities has expired without a successor agreement. Experts suggest the economic effects of the blockade, designed to halt Iranian exports through the strait, could take months to materialize, and its impact on Tehran's negotiating stance remains uncertain.
Treasury Secretary Scott Bessent announced last week that the administration is prepared to impose new sanctions targeting Iran's economy, describing them as measures "like have never been seen in the history of economic isolation on a country." These, he stated, would complement the U.S. blockade as a "one-two punch."
While Trump has asserted the Strait of Hormuz remains operational, data indicates a significant reduction in maritime traffic. An average of about 13 ships transited the strait daily last week, a sharp decline from over 100 ships per day prior to the recent conflict, according to data from Kpler. Energy Secretary Chris Wright noted that 30 vessels transited the strait over a three-day period, aided by military escorts.
Trump has also stated that "no talks or conversations are going on" with Iran, contradicting his previous assertions that negotiations were progressing with tight deadlines. Iranian officials have consistently denied that any direct negotiations were taking place.
The intensified economic pressure is directed at an Iranian economy already struggling with inflation near 65% over the past year, according to Iran's central bank. Mohammad Ghalibaf, speaker of Iran's parliament, criticized the U.S. approach, suggesting that increased pressure would not yield concessions beyond the scope of the collapsed memorandum of understanding.
Bessent previously noted that widespread protests in Iran in January, linked to economic hardship, occurred after Trump ordered "maximum pressure" measures. Experts like Karen Young, a senior fellow at the Middle East Institute, suggest the administration could target third parties and financial intermediaries, including China and Gulf states, that facilitate financial flows to Iran. However, Young cautioned that such measures have historically reinforced hardliners within Iran.
Targeting China
A primary strategy for increasing pressure involves targeting Iran's largest trading partner, China. While the Trump administration has implemented secondary sanctions on Chinese and Hong Kong-based entities, it has largely avoided sanctioning Beijing's core financial networks. Discussions within the administration reportedly include measures against major Chinese banks involved in Iranian oil imports. However, some officials express concern that such actions could provoke significant blowback from Beijing, potentially harming U.S. economic interests and other aspects of the complex U.S.-China relationship.
Secretary of State Marco Rubio stated last month that China's actions had not altered the trajectory of U.S. conflicts with Iran, and in some instances, China had been cooperative.
Iran's Resilience and Long-Term Strategy
Iran has developed strategies to withstand economic pressure, with inflation serving as a mechanism to pass costs onto its population. Hadi Kahalzadeh, a fellow at the Quincy Institute for Responsible Statecraft, believes Iran's economy is not on the verge of collapse, and it remains unclear if severe economic conditions would compel the regime to alter its stance toward the U.S. He noted that even economic collapse might not lead to the outcomes Washington expects, citing the possibility of a North Korea-like scenario where the regime maintains control despite widespread popular impoverishment.
Energy Secretary Wright indicated that President Trump is pursuing a "long game," aiming to ensure future U.S. energy supply and counter the threat of a nuclear-armed Iran. Young added that the full impact on U.S. and global oil markets has yet to be realized. She suggested that while strategic reserves and reduced imports by China have stabilized energy prices, this cannot continue indefinitely, implying a potential future crisis point.