RESOLVING THE LEDGER
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The Trump administration appears to be indicating it favors economic warfare in its approach to the conflict with Iran, touting its naval blockade of the Strait of Hormuz and previewing new sanctions still to be announced.
President Donald Trump, who has often discussed tight deadlines for diplomacy with Iran, has suggested the U.S. might attempt a longer-term squeeze, telling Fox News in an interview on Monday he is "not in a hurry" to bring about a solution.
A 60-day memorandum of understanding between the U.S. and Iran to lay the groundwork for an end to the war has expired and there is no other agreement to replace it.
The effects of the blockade, intended to deny any Iranian exports through the strait, could take months to bear effects on the Iranian economy, experts said, and it is not clear whether pressure from the blockade or any new actions could change Tehran's position at a future negotiating table.
Treasury Secretary Scott Bessent last week told Newsmax the president was prepared to order new sanctions that would punish Iran's economy.
"We are going to apply measures like have never been seen in the history of economic isolation on a country," he said, saying they would form a "one-two punch" alongside the U.S. blockade.
The Treasury Department did not offer comment on Tuesday.
Trump has claimed that the Strait of Hormuz is "open and operating," but in reality a small fraction of the world's oil is transiting a waterway through which a fifth of global supply once flowed.
Energy Secretary Chris Wright claimed that on Saturday 30 vessels transited the strait clandestinely, noting the use of military escorts. Data from Kpler said 28 vessels transited the Strait in a three-day period between Friday and Sunday.
An average of about 13 ships crossed the Strait each day last week, the firm said in a post on X , down from more than 100 ships per day before the recent conflict.
Trump, meanwhile, appears to be stepping back from his push to reach a deal with Iran that would be aimed at opening the strait, writing in a social media post on Tuesday there were "no talks or conversations going on" with Iran.
The president had consistently said the two sides were talking and at times set timeframes of only days or weeks to reach a final settlement. Iranian officials have long said Tehran and Washington were not negotiating.
Escalation in the economic space would target an ailing Iranian economy, which has suffered inflation near 65% over the past year, according to Iran's central bank.
Mohammad Ghalibaf, the speaker of Iran's parliament and its lead negotiator with the U.S., wrote on X Tuesday that Bessent was "way out of [his] league" and that the U.S. was "trying to pull a rabbit out of their hat."
"Americans think squeezing Iran harder will win concessions that were never part of the agreement," he said, likely referring to a memorandum of understanding between the two countries that has collapsed.
Bessent, in his Newsmax interview, noted widespread popular protests across the country last January in response to economic pain, which the secretary said took place after Trump ordered him to impose "maximum pressure" measures on the country's economy.
There are new and different measures the administration could take, said Karen Young, a senior fellow at the Middle East Institute. They include "squeez[ing] third parties and the interlocutors for money that gets to Iran," including China, Gulf states, banking intermediaries, so-called "Teapot" refineries, and shipping companies," she said.
Such moves "seems in the past only to have reinforced the kind of hardliners in Iran" who appear to be increasingly in control of the country, Young said.
The most straightforward strategies for turning up the heat on Tehran involve going after its top trade partner: China.
While the Trump administration has introduced a number of secondary sanctions targeting entities based in China and Hong Kong through the course of the conflict, it has left Beijing's financial networks untouched.
Sources say additional measures aimed at larger Chinese banks that facilitate oil imports from Iran are under consideration, but that officials within the administration are divided over whether to move forward, with those against the move arguing that the blowback from Beijing would be harmful to U.S. economic interests and detrimental to other areas of the tenuous relationship between the superpowers.
The Treasury Department has previously warned Chinese financial institutions that they could be sanctioned, but in public statements, top administration officials have downplayed China's role in the conflict.
"Nothing that China has done has in any way changed the trajectory ... in terms of the conflicts we're having with Iran," Secretary of State Marco Rubio said last month. "In fact, in some cases, they've actually been quite cooperative in regards to what they potentially could have done but didn't do."
Tehran has also honed its strategies for enduring economic pain. Inflation is among the ways Iran absorbs sanctions by passing the economic pain on to its people, said Hadi Kahalzadeh, a non-resident fellow at the Quincy Institute for Responsible Statecraft, a foreign policy think tank that promotes diplomatic engagement.
"I do not think Iran is close to [a] sudden collapse" of its economy, Kahalzadeh said, adding that it's not clear whether crippling economic conditions would force the regime to behave any differently in its posture toward the U.S.
"Even if the economy were to collapse, that would not necessarily lead to the outcome Washington expects," said Kahalzadeh, who ...
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