President Donald Trump is pivoting back to an economic strategy involving sanctions as a primary tool to achieve his administration's goals in Iran, including ending its nuclear program and fully reopening the Strait of Hormuz. This shift comes as military actions have not yielded the quick resolution initially promised, and U.S. weapon stockpiles have reportedly dwindled.
Trump stated that Iran is "broke" and facing significant economic hardship, suggesting this financial strain will force its leadership to negotiate. "They have no money. You know, Iran is broke, totally broke. And, they’re not paying their soldiers. They have inflation of 300%," Trump told reporters.
While Trump's inflation estimates exceed those cited by administration officials, the economic pressure is intended to break Iran's economy and compel concessions. The International Monetary Fund estimates Iran's overall economy has shrunk by 5.4%, and the Iranian government reported an annual inflation rate of 88.6%. U.S. Treasury Department data indicates that average loadings of Iranian oil have fallen significantly since the conflict began.
The Trump administration has been engaged in what it terms "Operation Economic Fury" since April 16, described by Treasury Secretary Scott Bessent as the "financial equivalent" of a bombing campaign. This strategy involves threatening sanctions against countries that buy oil from Iran or conduct banking with it.
However, experts note that sanctions are typically a longer-term strategy and may not be as effective as immediate military actions in halting a conflict. Richard Nephew, a former Obama administration sanctions strategist, pointed out that sanctions cannot bite as quickly as the impact of a disrupted Strait of Hormuz, which is critical for global energy supplies. He also criticized the lack of clear strategic objectives from the administration regarding its actions against Iran.
"Economic pressure is a possible element in his strategy, but he’s yet to explain the purpose," Nephew said. "Trump has systematically weakened his own hand through his inadequate use of force, inarticulate elucidation of an objective, and vacillation on negotiations."
Iran's Foreign Ministry spokesman, Esmaeil Baqaei, suggested that the U.S. relies on sanctions when diplomacy fails, but cautioned that increasing such pressure might hinder U.S. chances of a less damaging resolution to the crisis.
The ongoing U.S. naval blockade of Iranian ports and the threat of sanctions against third countries provide economic leverage, according to Juan Zarate, a former deputy national security adviser. However, he cautioned that these measures take time to yield results and the ultimate success depends on U.S. patience and willingness to apply severe sanctions.
Trump's emphasis on economic pressure marks a shift, as he has previously criticized past administrations for relying on sanctions, arguing they failed to prevent Iran's nuclear ambitions. He has consistently stated that Iran cannot possess nuclear weapons.
The economic repercussions of the conflict, including higher gasoline prices, have also impacted the U.S. economy, contributing to elevated inflation and borrowing costs that have affected Trump's popularity. A senior U.S. official, speaking anonymously, confirmed that the U.S. military has degraded Iran's ability to produce, sell, and ship oil and other energy resources, viewing the naval blockade and sanctions as effective tools with further options available to the administration.