Trump declares ‘economic warfare’ on Iran, threatens its backers

President Donald Trump said the U.S. will launch what he called the “most crushing economic operation ever taken against any country” against Iran, threatening severe financial penalties on any nation that helps Tehran evade sanctions.

In a Truth Social post, Trump said that “this will be Economic Warfare and Isolation on an unprecedented scale.”

“No one has given the Islamic Republic of Iran a greater opportunity to make a Deal than me,” and that “TRAGICALLY, for them, they have failed to take it,” the president said.

Iran’s navy, air force, and military production facilities have been destroyed and its currency rendered worthless, arguing the regime is “hanging by a thread,” Trump claimed.

He said any country whose financial institutions, businesses, airports, or government entities offer Iran a “lifeline” will face what he described as tremendous economic consequences of their own.

The president named oil smuggling, currency swap lines, cash transfers, exchange houses, ship registries, and front companies as channels he wants shut down immediately, stressing that Iran will never be permitted to acquire a nuclear weapon.

The announcement extends a pressure campaign the Trump administration has waged since April under the banner Operation Economic Fury, aimed at cutting off what it terms the regime’s global terror financing and revenue streams. 

Iran’s Foreign Minister Abbas Araghchi has accused Washington of escalating sanctions after previous rounds failed to force Tehran into submission, calling the approach a barrier to any negotiated exit from the conflict.

The escalation comes a day after the United Arab Emirates — one of the most important commercial partners for Iran— suspended all trade and financial dealings with Tehran, following what it said were two Iranian ballistic missiles fired at the Gulf state. Iran denied launching the missiles, calling the claim a “false flag.” Before the war, the UAE was Iran’s largest source of imports, supplying more than 30% of the country’s total imports in 2024, according to the World Trade Organization.  

But Washington’s ultimate leverage question runs through China, which has by far the deepest financial, logistical, and trade linkages to Iran, said Bob McNally, president of Rapidan Energy Group, noting that Beijing has already shown its willingness to retaliate.

The crude markets are likely to stay largely unmoved by the sanctions threat itself unless Iran’s hardline leaders respond by escalating militarily, McNally said on CNBC’s “Squawk Box Asia” on Thursday.

“The [crude] market is becoming a little less optimistic about this near-term and sustainable reopening of Hormuz,” said McNally.

Ship transits through the Strait of Hormuz continued to run well below pre-war norms last week, as Iran’s targeting of vessels and the U.S. naval blockade of Iranian ports kept most operators away from the chokepoint, according to Lloyd’s List Intelligence.

Preliminary data show 73 transits during the week ending on Aug.16, down from 91 the previous week, the shipping data provider said, with a small core group of operators remaining active.

Brent crude futures rose 0.5% to $92.09 per barrel on Thursday, and U.S. West Texas Intermediate ⁠crude gained 0.3% to $86.07 a barrel.

U.S. stock futures pared earlier gains following Trump’s announcement, with S&P 500 futures nearly flat.