Nearly six months after US President Donald Trump vowed a swift victory over Iran, the conflict appears to be at a standstill, with prospects of a military victory or negotiated settlement growing dimmer.
To break the deadlock, Trump has vowed an “economic D-Day” under which any country that does business with Iran would face “tremendous” economic consequences.
Iran, however, has long faced sanctions and has so far shown a willingness to endure pain and a capacity to adapt to immense economic and military pressure as the conflict drags on.
The key question for the US then becomes, will further sanctions work where other strategies have failed?
The exact mechanics of the new US economic pressure campaign remain unclear, with Treasury Secretary Scott Bessent promising to reveal them in a news conference on 24 August.
But in an interview with CNBC, Bessent made clear that the US is willing to take action against any country – friend or foe – that it believes is extending a lifeline to Iran.
“You are either with us or against us,” he said. “If you insist on doing business with [Iran], either transferring money, buying their oil or doing seaborne sea transfers, then the US treasury and the US government… will put its full might and force toward enforcing against you.”
Vice-President JD Vance has described the sanctions as a “new phase” of the conflict in which economic pressure is the “most effective” tool available to the US.
“They’re going to try to apply economic pressure to us, but what has been true over the last couple of weeks is that they felt a lot more pressure than we have,” Vance said on the Clay Travis and Buck Sexton show.
“We’re going to keep that going because we think that’s the best way to ultimately achieve the final objective,” he added.
Iran has faced significant US sanctions since nearly the beginning of the Islamic Republic in 1979.
The economic pressure campaign intensified after the first Trump administration withdrew from the Joint Comprehensive Plan of Action (JCPOA), a 2015 pact between world powers and Iran to curb its nuclear programme.
And in the current conflict, the US government has already announced Operation Economic Fury, a two-pronged US economic campaign combining US treasury-co-ordinated sanctions against regime financial flows and a naval blockade against Iranian ports.
Imran Bayoumi, a geostrategy expert with the Atlantic Council in Washington DC and former policy adviser to the defence department, told the BBC the latest announcement was likely the result of mounting frustration that other options have not delivered the results Trump wants.
“This is really a recognition that the US is almost stuck in this war,” he said. “It’s another try at economic pressure.”
“This is just another tool that the US is using,” Bayoumi added. “We’ve not seen a clear strategy laid out by the administration with either military or economic tools. The question of what the US is trying to achieve is still unanswered.”
Michael Parker, an eight-year veteran of the Office of Foreign Assets Control (OFAC) and expert on economic sanctions, said the new strategy will likely represent an effort to “expand the economic blast radius” of sanctions by targeting third countries that still deal with Iran, but have economies that depend on the US dollar.
“Thus far, the US has largely used the threat of these secondary sanctions against foreign financial institutions to encourage compliance with sanctions policy,” he said.
“But this is a lever that is sort of unexplored insofar as targeting anything touching the US dollar that is also touching Iran,” Parker added.
As an example, Parker pointed to US financial institutions that help Iran evade sanctions, or directs money towards Iranian coffers.
How Iran would respond to these moves remains unclear, but sanctions experts say that Iran has so far proved adept at using irregular channels to circumvent sanctions – such as “shadow” vessels transporting oil or new commercial fronts unlisted by US sanctions.
“You keep seeing new names popping up, because Iran is adapting really quickly,” said Mohammed Hammouda, an export control and sanctions manager at the London Stock Exchange. “Whatever sanctions one does, they find a new road [around it].”
These Iranian counter-moves, he added, often leave those charged with enforcing compliance playing a game of catch-up.
“Sanctions are all on paper, but the hard work is behind the scenes,” Hammouda added. “There are teams worldwide trying to impose sanctions and identify those parties involved, which is why Iran has to try to adapt.”
How effective these sanctions are will largely be determined by how the countries that are ultimately targeted – which could include US allies like Turkey and Iraq, as well as China – react.
“Some of this is out of Iran’s hands,” Parker said. “Iran’s ability to evade or avoid sanctions is, in large part, contingent on other countries and financial institution’s willingness to give them [Iran] access to the formal banking system.”
Parker believes that the sanctions are “only as powerful” as the willingness of targeted countries to comply with American foreign policy objectives, or face potentially painful sanctions on trade involving the US dollar.
Some experts question whether that willingness currently exists.
“I can’t really see China agreeing to that, for example,” Bayoumi said. “These states have all been able to navigate their own interests with the Trump administration.”
“The underlying point is that this is just another tool,” he added. “But the broader question of strategy remains. Absent that, I’m not sure this is going to change anything long term.”
