President Donald Trump has issued another economic threat against Iran, vowing “TREMENDOUS Economic Consequences” for any country that trades with Tehran. In another rant on Truth Social on Wednesday, he wrote: “ANY country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face TREMENDOUS Economic Consequences. US economic terrorism threatens global economy and sovereignty worldwide.” The US had agreed to lift sanctions on sales of Iranian oil for the duration of a 60-day ceasefire that expired on Monday, but these were reimposed after the deal collapsed amid disagreement over the Strait of Hormuz last month.
For decades, it has imposed measures such as freezing assets, implementing trade embargoes and applying sanctions against Iran over issues such as its nuclear development and human rights violations. Since the war, Washington has also imposed a naval blockade, restricting Iranian oil exports as well as levying additional maritime and energy sanctions since the war broke out. Trump could escalate the situation by imposing secondary sanctions on third parties.
However, he is limited in what he can enforce, say experts. Iran appears to have profited from the outbreak of conflict, with the country’s semi-official Fars news agency reporting that the country generated $7.5bn in oil revenues over the first four months of the year. Citing the Iranian oil ministry, the agency said that this marked a revenue that is 1.5 times larger than the amount generated in the same period last year and is expected to cover the government’s foreign currency expenses for the rest of the year.
These figures could not be independently verified. Iran has developed ways to circumvent the worst impact of sanctions, including the use of shadow fleet tankers, floating storage and the use of alternative ports. Dr Quilliam says that while further sanctions could increase pressure on Iran’s economy, alone they are unlikely to be decisive.
There are also so many areas where the oil and/or money is moved - Iraq, UAE, Malaysia, overground routes Pakistan, Türkiye, Central Asia - so there is a lot to capture.” Trump has developed a notorious reputation for issuing stern threats before later reneging on them - earning him the infamous ‘TACO’ nickname (Trump Always Chickens Out) on Wall Street. But despite this, Dr Quilliam says that the repercussions of sanctions on Iran could still be dire. Secondary tariffs have been struck down by the Supreme Court on numerous occasions.
Nevertheless, Trump could still sanction smaller “teapot” refineries in China that account for around 25 per cent of Chinese refinery capacity, sanction Chinese banks and impose a land blockade. Last week, the Senate passed a Russia sanctions bill that included new Iran sanctions and could give Trump new tariff powers that he could potentially use against countries that aid Tehran’s commerce and weapons procurement. But the legislation must still pass the U.S.
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