From Oil To Banks: Donald Trump's Expanding Economic War On Iran

The Trump administration has already used sanctions across much of Iran’s external economic network, from oil tankers and Chinese refineries to currency exchanges, financial intermediaries and foreign networks supporting Iran’s military programmes. The Treasury Department has described the campaign as “Economic Fury”, aimed at disrupting the Iranian regime’s ability to generate, move and repatriate revenue.

Yet Washington is now considering how much further that pressure can go.

According to Reuters, options under discussion include sanctioning larger Chinese banks that process Iranian funds. It also reported that a land blockade involving Iran’s neighbours had been discussed, while the Trump administration is seeking expanded authority for secondary tariffs on countries aiding Iran. These remain reported options rather than established US policy.

The challenge is that each escalation could also increase the cost to Washington, its allies and the wider global economy.

What Has The US Already Done?

The first layer of the campaign has focused on Iran’s oil revenues.

On April 24, the Treasury Department sanctioned Hengli Petrochemical (Dalian) Refinery, a China-based independent refinery it described as one of Iran’s largest customers for crude oil and petroleum products. The same action targeted about 40 shipping companies and vessels involved in Iran’s shadow fleet, which Treasury said helps transport petroleum and generate revenue for Tehran.

A separate Treasury warning on April 28 focused on China-based independent “teapot” refineries. Treasury said China purchases approximately 90% of Iran’s oil exports and that teapot refineries account for the majority of those imports. It warned that foreign financial institutions that knowingly facilitate significant transactions involving sanctioned Iranian petroleum-sector actors could face secondary sanctions.

Targeting The Financial System

Oil is only one part of the pressure campaign.

In May, Treasury sanctioned more than 50 individuals, companies and vessels connected to networks it said were generating billions of dollars for Iran. The measures included an Iranian foreign-currency exchange house and associated entities that helped Iranian actors move funds through the international financial system.

Treasury then moved again on May 28 against networks involved in Iranian military oil sales, saying the measures were intended to deprive the regime and its armed forces of revenue needed to rebuild their capabilities.

Secondary sanctions allow Washington to pressure foreign institutions by threatening restrictions on access to the US financial system if they facilitate transactions involving sanctioned Iranian actors. A foreign bank or business therefore does not have to be Iranian to face consequences under the US sanctions system.

Going After The Shadow Fleet

Another target is the network of vessels and intermediaries used to move Iranian petroleum while concealing its origin or ownership.

Treasury has described ship-to-ship transfers, falsified documentation, vessel identity manipulation and intermediary networks used to obscure Iranian oil shipments. Its June 5 action also targeted Iranian LPG-smuggling and shadow-banking networks involving front companies, foreign bank accounts and infrastructure across several countries.

The approach allows Washington to keep expanding sanctions without imposing a single sweeping ban on all Iranian trade. But targeting individual vessels and intermediaries can also create a cycle in which sanctioned entities are replaced by new networks and companies.

Targeting Weapons Procurement

The sanctions campaign has also moved beyond revenue generation to Iran’s military supply chains.

In June, Treasury sanctioned nine individuals and entities supporting weapons procurement for Iran’s Islamic Revolutionary Guard Corps and Ministry of Defence and Armed Forces Logistics, including China- and Hong Kong-based entities.

On July 15, Treasury targeted another international procurement network, saying seven individuals and entities supported IRGC weapons procurement through foreign aviation and transport companies, financial conduits and travel coordinators.

Earlier, Treasury also targeted an oil-smuggling network linked to Iranian regime figures and, in July, moved against networks associated with Iranian financier Babak Zanjani, including companies involved in financial services, gold and precious metals and digital assets.

Together, these measures show how broad the sanctions strategy has become: from the oil that generates revenue to the vessels that transport it, the financial networks that move the money and the international channels supporting Iran’s military programmes.

What Could Come Next?

The most consequential next step would be moving from targeting individual companies and networks to targeting major institutions that provide access to the international financial system.

Reuters reported that one option under consideration is sanctioning larger Chinese banks that process funds connected to Iran. Such a move would represent a significant escalation because major Chinese financial institutions are deeply integrated into international trade and finance and could trigger a response from Beijing.

Treasury’s April warning over Chinese teapot refineries already demonstrates that Washington is prepared to threaten foreign financial institutions with secondary sanctions over Iran-related transactions.

The question is how far Trump is prepared to extend that approach.

Could The US Impose Wider Trade Penalties?

Another option is using tariffs or other trade penalties against countries that continue facilitating Iranian commerce.

Reuters reported that Trump wants expanded authority to impose secondary tariffs on countries aiding Iran, although such a move would face legal and political challenges in Washington.

Unlike conventional sanctions, tariffs could seek to raise the economic cost for countries and businesses that continue supporting Iran.

But broader trade penalties would also widen the number of actors affected by the campaign, making it harder to isolate Iran without creating disruptions elsewhere.

Congress has also examined China’s economic relationship with Iran. H.R. 6528, introduced in December 2025, would require an intelligence assessment of Chinese purchases of Iranian oil and Chinese support for Iran’s ballistic-missile programme, including transshipment points and shell companies. The bill remains at the introduced stage and does not itself authorise new tariffs.

That shows Iran’s China-linked economic channels are also receiving scrutiny in Congress.

What About A Blockade?

One of the most far-reaching options discussed publicly would be a land blockade involving Iran’s neighbours.

Reuters reported that such a measure had been discussed as a possible way to restrict trade and increase pressure on Tehran. But it would require cooperation from neighbouring states and could also disrupt supplies reaching Iranian civilians.

A land blockade would come on top of an existing US naval blockade around Iran’s maritime access. The White House said in July that Trump had ordered “total naval control” of the Strait of Hormuz as part of the maximum-pressure campaign.

Defense Secretary Pete Hegseth said on August 13 that the United States could maintain the naval blockade indefinitely, while Treasury Secretary Scott Bessent said Washington was preparing further measures against Iran. Reuters reported that Bessent described the coming economic steps as unprecedented.

The military and economic measures are therefore increasingly connected. Washington can restrict Iran’s ability to export oil and access finance while using pressure at sea to constrain the movement of goods.

How Much More Pressure Can Iran Take?

The administration’s strategy depends on whether tightening sanctions can reduce Iran’s access to revenue faster than Tehran can adapt.

The Treasury record shows repeated efforts to close different parts of the same system: oil buyers, shipping networks, currency exchanges, financial intermediaries, weapons procurement channels and offshore businesses.

But escalation becomes progressively harder.

Targeting individual entities is relatively contained. Targeting major Chinese banks or imposing broad secondary tariffs could affect much larger parts of the global financial and trading system.

The administration can continue expanding the existing sanctions architecture, or move towards measures that force third countries and major financial institutions to absorb a much larger share of the cost.

The economic pressure is also unfolding against a deteriorating diplomatic backdrop. On August 17, Reuters reported that a senior Iranian official said Tehran was shifting its policy from defence to offence if diplomacy failed, while warning that Iran could take military action to break the US naval blockade.

On August 18, Iran’s top negotiator Mohammad Baqer Qalibaf said the Strait of Hormuz would remain closed until Washington met the conditions of the interim agreement reached in June, underscoring how closely the economic pressure is now tied to the wider confrontation.

What Happens Next?

The US already has the tools to sanction much of Iran’s external economic network. Treasury’s actions show that the administration is continuing to expand that machinery rather than relying on a single new measure.

The immediate question is what Washington means by the unprecedented measures Bessent said were being prepared. Reuters reported that he described the forthcoming steps as unprecedented, but the administration has not publicly detailed the package.

The next stage could involve broader financial pressure on Chinese institutions, additional secondary sanctions or new trade penalties. Those remain reported options rather than established US policy.

The administration therefore faces a choice between making the existing sanctions campaign more comprehensive and taking measures that force third countries and major financial institutions to absorb substantially greater costs.

The question is no longer whether Washington can exert economic pressure on Iran. It is how far it can extend that pressure without turning a campaign aimed at Tehran into a wider confrontation with the banks, companies and governments that keep Iran connected to the global economy.

Washington already has a wide sanctions architecture targeting Iran’s oil revenues, financial networks, shadow fleet and military procurement. The next question is how far Trump is willing to extend that pressure before the costs of isolating Iran begin to spread beyond Iran itself.