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."

Efforts to isolate and squeeze

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

Iran is starting to pay a price for those attacks.

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.

"Regional countries seem to be taking steps — one step at a time — to make it more difficult for Iran to use those jurisdictions to bypass sanctions, and as a result of the Iranian regime's own decisions to target these countries," says Miad Maleki, a former senior U.S. Treasury official who is currently with the Foundation for Defense of Democracies, an organization with close ties to U.S. and Israeli national security establishments. "The landscape of economic sanctions evasion is shifting for Iran."

Former Treasury officials and analysts say the isolation and pressure the Trump administration intends to build on will ultimately come down to whether countries — like China, a longtime customer of Iran's crude oil supply — will cooperate.

Not long after Trump's Aug. 19 post on Truth Social vowing to unleash an "ECONOMIC D-DAY" on Iran, a spokesman for China's Foreign Ministry said that China opposed unilateral sanctions and that pressure would not resolve the crisis in Iran.

In 2025, China purchased an estimated $31 billion in crude oil from Iran, which accounted for nearly 45% of Iran's government budget, according to a March report from the U.S.-China Economic and Security Review Commission. In July, Secretary Bessent said those oil imports plunged by approximately 40% from prewar levels because of the U.S. naval blockade. It's not clear whether Beijing, which has provisionally tapped its oil reserves, will ultimately give in to Trump's demands and cut imports and whether the Trump administration will penalize China if it doesn't.

"There has been something of a détente between the U.S. and China after some tit-for-tat where we saw semiconductors, rare earth minerals used in economic warfare," says Adam Szubin, who served for nearly a decade as the director of Treasury's Office of Foreign Assets Control and is now Of Counsel at the law firm Covington & Burling. "It seems like the Trump administration and the Chinese government want to see things quieter, and so we're probably at a moment where there's some hard discussions going on behind the scenes about how much China is willing to do without the U.S. following through on its threat."

A lenient stance toward China could amount to a lifeline for Iran's government. A hard-line approach may trigger blowback.

"The U.S. is going to be forced to impose sanctions on substantial Chinese entities to make this work," says Richard Nephew, who was the lead sanctions expert on the U.S. negotiating team that reached the 2015 nuclear deal with Iran. "If we do that, then we will lose any chance of a trade deal with China or will be forced to back down on Iran. That said, the blockade is still doing a lot of damage to Iran, so even if sanctions don't have Chinese cooperation, however grudging that may be, there will still be an impact."

When asked about possible sanctions against China at his Monday press conference, Secretary Bessent simply said "no one is above the reach of U.S. sanctions," never mentioning China directly.

The view from Tehran

Many people living in Iran say they're already under tremendous economic pressure due to the U.S. naval blockade and decades of economic sanctions. "My neighbor, his father has cancer and they can't find the medicine he needs," says one 40-year-old woman in Tehran who asked NPR not to identify her for fear of government reprisal. "A couple of the hospitals they visited couldn't admit the old man for chemotherapy because of broken medical equipment they haven't been able to replace since nothing is entering the country."

The woman, who works as a baker and caterer, says when she went to the bank over the weekend, she learned that her account was blocked with nearly $1,000 missing. Bank associates told her the bank had been hacked, though didn't say by whom.

Her modest grocery haul from a few days ago consisting of laundry detergent, a bag of rice, a couple cartons of milk, lentils, a few bags of pasta and sanitary pads came out to roughly $30 — a big chunk of the average monthly minimum wage of roughly $100.

"These are bitter days we're living through," she said in a voice note to NPR.

Some Iranian officials haven't shied away from openly discussing the impact of the U.S blockade.

Majid-Reza Hariri, the head of the Iran-China Chamber of Commerce, said in an interview this month with Iranian news site Khabar Online that Iran cannot afford to lose maritime trade. He pointed out that shipping costs have soared from $3,000 per container by sea before the blockade to $12,000 after.

"The blockade is worse than the war," Hariri said.

Trump's economic war has led others within the ruling establishment to strike a more defiant tone.

Iran's new security chief Mohsen Rezaei said in an interview on state TV Saturday that Iran would retaliate against countries joining Trump's economic war in a "seismic manner," by targeting tankers using alternate oil shipping routes beyond the Strait of Hormuz so that "not even a single drop of oil will leave from the region."

The war is now about who blinks first in the mutually assured economic destruction the U.S. and Iran are pursuing. Tehran believes the chaos it's unleashed in the region and Trump's changing tactics show it has gained the upper hand.

"Iran's patience for this type of economic pain is not going to be as much given the fact that they will use the leverage they have at this point to make sure that what Iran has experienced in the last number of decades does not continue," says Foad Izadi, an analyst in Tehran aligned with the government. "Either everybody enjoys the wealth of this region or no one will."

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