Trump bets economic pressure can squeeze Iran as regime’s own failures deepen the pain

President Donald Trump is signaling, at least for now, he is prepared to let mounting economic pressure on Iran do more of the work rather than immediately expand military action against Tehran.

"We are only semi-negotiating with them. We are just watching Iran with its huge inflation and the fact they have no money," Trump told Axios’ Barak Ravid in a phone interview Sunday. Axios reported Aug. 9 that Trump described the U.S. approach as "low-keying it" and said Iran was in severe economic distress and struggling to pay its troops.

Trump has argued that the U.S. naval blockade on the Strait of Hormuz has compounded Iran’s financial crisis. His comments come after weeks in which the administration repeatedly raised the possibility of renewed large-scale military action.

But as the administration increasingly points to Iran’s financial distress as leverage, a more complicated question is emerging: How much of Iran’s economic crisis is the result of U.S. sanctions , the war and blockade — and how much stems from decades of corruption, economic mismanagement and spending decisions by the Islamic Republic itself?

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Trump reinforced the message on Truth Social Sunday, writing that Iran had shown "51 years of bad behaviour" while sharing a graphic depicting the Iranian rial’s steep decline. The graphic was titled "Iran has NO MONEY" and described the currency as "trash."

The economic pressure is increasingly visible in the daily lives of ordinary Iranians. An investigation published by the Iranian newspaper Jahan-e Sanat last week described supermarket workers encountering customers who allegedly shoplifted basic groceries including bread, cheese and meat, or ate packaged food inside stores because they could no longer afford it. The accounts offered a stark glimpse of the strain on Iranian households as prices rise and purchasing power erodes.

Washington, meanwhile, has intensified its campaign against Tehran’s revenue streams. Under what the Treasury Department calls Economic Fury, the administration has targeted Iran’s oil trade , shadow banking networks, weapons procurement operations, cryptocurrency holdings and sanctions-evasion infrastructure. Treasury said June 10 that the campaign had prevented "tens of billions of dollars" in revenue from being accessible to the Iranian regime and its proxies. On July 29, Treasury said OFAC had sanctioned more than 100 vessels linked to Iran’s shadow fleet since the beginning of 2026.

A Treasury spokesperson told Fox News Digital on background that "Economic Fury has left the regime desperate for cash."

"Iran’s economy is in freefall, inflation has skyrocketed, and as President Trump said on Sunday, the regime’s ability to pay its troops has been decimated," the spokesperson said.

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A U.S. official told Fox News Digital on background that the administration still views economic pressure as one part of a broader strategy.

"President Trump has always been clear that he will never allow Iran to have a nuclear weapon. While he has been consistent in saying he prefers a diplomatic solution, he continues to retain all options if Iran continues to engage in terrorism and refuses to make a deal," the official said.

"The United States is strangling what’s left of Iran’s economy with one of the most successful naval blockades in history – and Iran would be wise to make a deal. Otherwise, they know what will happen."

Miad Maleki, a senior fellow at the Foundation for Defense of Democracies and former Treasury Department sanctions official, said the pressure has accelerated Iran’s economic decline, but argued that Tehran’s own policies created many of the underlying vulnerabilities.

"Sanctions and the war have accelerated Iran's economic decline, but both are consequences of the regime's own troublemaking; its nuclear brinkmanship, missile and drone attacks on tankers , and support for terror proxies, not causes imposed on an innocent bystander," Maleki told Fox News Digital.

"It's a government's basic responsibility to provide for and serve its nation — this regime has instead served a failed revolutionary ideology that has produced nothing but suffering for ordinary Iranians," he added.

Maleki said the deeper story can be seen over decades, arguing that even when sanctions eased and oil revenues increased, Iran continued directing significant resources toward its security establishment and the Islamic Revolutionary Guard Corps.

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According to Central Bank of Iran national accounts data provided by Maleki to Fox News Digital, Iran’s military share of total government spending rose from 16% in 1993 to 52% by 2006, while education spending fell from 27% to 15%. Spending on health and social affairs also declined as a share of government expenditures, he said.

Maleki pointed to the 2020 budget as another example of the disparity. The IRGC received approximately $6.96 billion, compared with $2.73 billion for Iran’s larger conventional military, known as the Artesh — roughly 2.5 times as much, according to an analysis published by the United States Institute of Peace’s Iran Primer based on figures from Iran’s parliamentary research center.

"The issue is not simply that Iran spends heavily on defense," Maleki said. "It is that an oil-dependent economy repeatedly directed enormous resources toward the military and the IRGC while basic public services and ordinary households were under increasing pressure."

And the official budget captures only part of that spending. Maleki, citing both his experience at the Treasury Department and outside research, said the IRGC benefits from significant commercial and off-budget resources. A 2017 American Enterprise Institute study estimated that the IRGC’s so-ca...

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