Can Trump's economic war against Iran do what airstrikes and negotiations couldn't?

Vehicles drive past a billboard with an illustration showing the Strait of Hormuz and the sewn lips of President Trump in a square in downtown Tehran, Iran, May 2. Vahid Salemi/AP hide caption

When the U.S. and Israel launched their war against Iran in February, President Trump vowed a swift victory.

Now, nearly six months later, and on the heels of a failed 60-day ceasefire deadline that was meant to end the war, the U.S. instead finds itself entangled in a protracted conflict. The war with Iran has battered the global economy, agitated Gulf allies and depleted the U.S. arsenal . It has also weakened President Trump's leverage to pursue his primary war goal, which has shifted from curbing Iran's nuclear ambitions to regime change and is now aimed at prying the Strait of Hormuz out of Iran's grip.

It is against this backdrop that U.S. Treasury Secretary Scott Bessent unveiled a new sanctions campaign Monday against Iran that intends "to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone." Bessent put nations that continue doing business with Iran on notice, saying they should "expect to share in the isolation of a withering regime."

Past administrations, including Trump's first, have attempted to pressure Iran economically through various sanctions campaigns over the years. But the regime has kept money flowing and the government afloat through various smuggling operations and schemes, according to past U.S. Treasury Department investigations. That has raised questions about whether another punishing economic campaign can really bend — or break — Iran's ruling establishment.

"One thing that we've seen over the years is that maximum pressure tends to generate maximum resistance from Iran's side," says Esfandyar Batmanghelidj, chief executive of the London-based Bourse & Bazaar Foundation, a think tank focused on Iran's economy. "What the Trump administration is likely to do is trigger Iranian leaders to resume some of the more aggressive targeting in the region in order to show they're not going to be coerced into basically capitulating to U.S. demands."

Soon after the U.S. and Iran dropped their first bombs on Iran, the Islamic Revolutionary Guard Corps launched retaliatory missiles against several U.S. Gulf allies.

The United Arab Emirates, which was the biggest importer of Iranian goods worldwide, valued at roughly $21 billion in 2024, according to the World Trade Organization, and a country Iran has used in the past to bypass sanctions, announced recently it's halting all trade and financial transactions with Iran.