Dire Strait: Why Economic Threats Might Escalate the War in Iran

Motorists drive past an anti-US billboard in Tehran on August 24, 2026.

Iran responded with defiance on August 24 to a US threat of —AFP via Getty Images Six months into the war between the United States and Iran, President Donald Trump has turned to economic warfare to force the country into submission and threatened an “ Economic D-Day ” against Iran.

This new American strategy was spelled out by Treasury Secretary Scott Bessent earlier this week : a campaign of U.S. sanctions against countries and financial institutions that do business with Iran or help it evade sanctions.

The proposed new sanctions go beyond oil exports to target digital assets, gold, and the aviation sectors that help finance the Iranian economy.

Bessent described it as a campaign to “collapse every last option for Iran.” Making all this work depends on whether the U.S. can convince Iran’s most important trade partners to cut out the Islamic Republic.

China, which buys around 80% of Iran’s seaborne crude oil , has already pushed back, warning that it will “ take all necessary measures ” to protect its interests should it be targeted by U.S. sanctions.

Beijing's response casts doubt on whether Washington’s new gambit can deliver results.

If the aim, as stated, is to deal an economic blow to Iran, the fact is that the country is already under severe strain.

A U.S. naval blockade has constrained oil exports , the primary source of revenue for Iran.

Ordinary Iranians are facing greater economic pressure as their purchasing power is eroding: food inflation reached 128% year-on-year in July and families are cutting back on meat and other items.

The dollar value of the minimum wage has fallen from about $105 to $86 since late March as the rial has weakened significantly.

On Monday, Iranian currency fell to a record low of 2.02 million rials to the dollar.

So what is the goal of Bessent’s announcement? Simply put, acknowledging the reality—even if the administration won’t state it in these terms—of avoiding a further, major military campaign as the conflict drags on.

For their part, Iran’s leaders have dismissed the threat of intensified economic warfare, insisting the new punitive economic measures would fail.