The shift from military strikes toward economic pressure represents the Trump administration’s latest effort to compel Iran to accept limits on its nuclear program, with officials arguing that targeting Iran’s financial networks could prove more decisive than continued bombing — though skeptics in Congress and the sanctions community warned the strategy carries significant risks.
Treasury Secretary Scott Bessent warned Wednesday that the United States would impose secondary sanctions on financial institutions doing business with Iran, calling the planned economic measures the “financial equivalent” of the military bombing campaign. The announcement came as a U.S.-Iran ceasefire was set to expire the following week, with negotiations over a broader settlement still unresolved.
“We have told companies, we have told countries that if you are buying Iranian oil, that if Iranian money is sitting in your banks, we are now willing to apply secondary sanctions, which is a very stern measure,” Bessent told reporters at a White House briefing. “And the Iranians should know that this is going to be the financial equivalent of what we saw in the kinetic activities.”
Treasury targets Iranian financial networks
The warning came a day after the Treasury Department sent letters to financial institutions in China, Hong Kong, the UAE, and Oman, warning them that handling Iranian money or facilitating Iranian transactions could expose them to U.S. secondary sanctions. Bessent said two Chinese banks had received specific warnings. President Donald Trump is preparing to visit Beijing next month for talks with Chinese President Xi Jinping.
The administration separately imposed sanctions Wednesday on an oil smuggling network connected to Ali Shamkhani, a deceased senior Iranian security official who had served as a close adviser to Iran’s former Supreme Leader. The sanctions covered dozens of individuals, companies, and vessels involved in transporting and selling Iranian and Russian oil through front companies, many based in the UAE.
“Treasury will continue to cut off Iran’s illicit smuggling and terror proxy networks,” Bessent said in a statement. “Financial institutions should be on notice that Treasury will leverage all tools and authorities, including secondary sanctions, against those that continue to support Tehran’s terrorist activities.”
A person familiar with the administration’s thinking, speaking to the Associated Press on the condition of anonymity because they were not authorized to discuss private deliberations on the record, said the economic measures were part of a broader strategy to compel Iran to accept limits on its nuclear program. The private argument being made to Trump, according to that person, was that Iran’s leadership could be pushed to the negotiating table if it could no longer pay its loyalists.
Administration officials said they were also considering targeting bonyads — the charitable trusts that account for a significant portion of the Iranian economy — as additional economic pressure points.
Administration signals confidence in its position
Trump administration officials said they believed the ceasefire and a blockade of the Strait of Hormuz had shifted the strategic balance. Iran has endured what U.S. officials described as tens of billions of dollars in infrastructure damage from the bombardment, including significant setbacks to its oil industry that could take years to repair.
Vice President JD Vance said Tuesday that Trump “doesn’t want to make, like, a small deal. He wants to make the grand bargain,” adding that Trump was offering Iran the prospect of economic recovery in exchange for a commitment against nuclear weapons. “That’s the trade that he’s offering,” Vance said. “If you guys commit to not having a nuclear weapon, we are going to make Iran thrive.”
Deputy Chief of Staff Stephen Miller, in a Fox News appearance Tuesday evening, said Trump had “played the checkmate move” on Iran by implementing the Hormuz blockade. “If Iran chooses the path of a deal that’s great for the world, that’s great for everybody. If Iran chooses the path of economic strangulation by blockade, then the world will pass Iran by,” Miller said.
Skeptics warn of blowback and diminishing returns
The proposed expansion of sanctions drew skepticism from both Democratic lawmakers and sanctions specialists. Sen. Elizabeth Warren, Democrat of Massachusetts and the top Democrat on the Senate Banking Committee, argued that the Hormuz blockade had already created a financial windfall for Iran by driving up global oil prices — effectively undercutting the sanctions’ intended effect.
“Instead of circumstances where we can keep sanctions on Iran and constrict their economy, the blockade in the Strait of Hormuz — combined with the sharply rising price of oil — has helped Iran’s economy,” Warren said. “What Secretary Bessent is trying to do is mop up the mess that Donald Trump has created by initiating this war.”
Sanctions attorney Daniel Pickard said imposing secondary sanctions on trading partners could produce “diplomatic and economic blowback” that erodes coalition support against Tehran. “A lot of our trading partners have been outspoken in regard to their opposition to the conflict in Iran,” Pickard said. “Most economic sanctions professionals would agree that when you get more people on the team, the chances of your economic sanctions being effective or greater.”
Republican responses were mixed. Sen. Thom Tillis of North Carolina said he would “support anything” the administration proposed to pressure Iran. Sen. Mike Rounds of South Dakota, a member of both the Banking and Armed Services Committees, expressed doubt that additional sanctions would prove decisive. “I’m not sure if it’s sanctions that’ll do it. I think we’re putting some pretty heavy sanctions on right now,” Rounds said. “I personally am just not optimistic that we actually can fix this thing without a regime change.”
Analysts see a narrowing diplomatic window
Trita Parsi, executive vice president of the Quincy Institute — a think tank that has been critical of the administration’s decision to launch the war — wrote in a new analysis that the ceasefire had shifted the strategic picture in a direction that could favor a settlement. “The window now open offers Tehran a chance to convert battlefield leverage into lasting strategic gain,” Parsi wrote. “To let it close would mean forfeiting not just incremental progress, but the possibility of reshaping its economic and geopolitical position.”
Iran “now appears to need an agreement more than the United States does,” Parsi wrote, while adding that before Trump announced the ceasefire, the president had been “politically cornered and strategically constrained.”