Explainer: Trump Wants More Economic Pressure on Iran. What Are His Options?

The recent threats from President Donald Trump to increase economic pressure on Iran have sparked a mix of reactions, ranging from dire warnings about the consequences for ordinary Iranians to predictions that Tehran will find ways to circumvent any new sanctions.

Economic pressure on Iran is not a new concept; the United States has been applying various forms of restrictions since the late 1970s, when concerns about its nuclear program began to mount. Over the years, Washington has levied significant sanctions that have impacted Tehran’s ability to trade, including maritime, energy, and financial restrictions. The Trump administration has taken this approach to new heights, with over 1,000 individuals and entities targeted by Treasury’s Office of Foreign Assets Control (OFAC) since his second term began.

One potential area for further pressure is through Chinese “teapot” refineries, which account for a quarter of China’s refinery capacity. These independent facilities operate on thin profit margins and are largely disconnected from the US financial system. Imposing sanctions on these entities would likely target their access to Iranian oil, which currently makes up more than 80% of Beijing’s imports.

However, experts caution that this approach may not be as straightforward as it seems. Chinese refineries have already been deterred by past US sanctions from buying large quantities of Iranian oil, but the independent ones might be less susceptible to pressure. Moreover, imposing such measures could lead to retaliatory actions from China, which has its own interests in maintaining a stable energy supply.

Another possible path for Trump is targeting Chinese banks that process billions of dollars’ worth of Iranian oil transactions and help fund Tehran’s military procurement efforts. Imposing secondary sanctions on these institutions would not only penalize the entities themselves but also send a chilling signal to other financial institutions in China.

US officials are playing down tensions with Beijing ahead of an expected meeting between Trump and President Xi Jinping later this year. They worry that curbing Chinese exports of critical minerals could undermine American efforts to develop its own supplies for advanced technology production.

A more significant concern, however, lies beyond the diplomatic niceties: the escalating game of “whack-a-mole” with Iran’s trading partners, who find ways to bypass sanctions only to be targeted anew. This cycle creates uncertainty and hardship for ordinary Iranians. Brett Erickson, managing principal of Obsidian Risk Advisors, notes that Tehran simply creates new entities to replace those hit by sanctions.

One way or another, Trump seems intent on increasing pressure on Iran. Some officials have floated the idea of a land blockade, which would require cooperation from Iran’s neighbors in the region. A land blockade could bring significant hardship to ordinary Iranians by halting imports of essential goods like food and energy, but its feasibility is uncertain.

The proposed secondary tariffs face a tricky legislative path ahead, as the Supreme Court has already struck down the legal basis for such taxes. Even if Trump were able to use new powers granted by Congress to impose these tariffs, it’s unclear whether they would be effective in pressuring Iran’s trading partners into compliance.

Ultimately, Trump’s approach to economic pressure on Iran is a high-stakes gamble that risks both unintended consequences and blowback from other nations. As he weighs his options, one thing is certain: this game of sanctions will continue to play out with unpredictable outcomes for all parties involved.