The United States has announced a slew of new economic sanctions against Iran and threatened countries it trades with, aiming to choke Tehran\u2019s economy as the months-long conflict remains deadlocked.<\/p>\n
At least 60 entities across the Middle East, Asia and Europe have been targeted in the latest sanctions as part of the economic pressure campaign that could further disrupt energy markets and rattle the global economy.<\/p>\n
The US-Israel war launched on February 28 has already resulted in a spike in oil prices and disruption in global supply chains due to the blockade of the Strait of Hormuz, through which a fifth of global oil and gas previously passed.<\/p>\n
In this explainer, we break down how secondary sanctions work, and when the US has used them in the past.<\/p>\n
What has the US threatened Iran\u2019s trading partners with?<\/p>\n
The Trump administration has already been waging an economic pressure campaign against Iran under the banner of \u201cOperation Economic Fury\u201d, since the launch of the war in February.<\/p>\n
However, the US has recently decided to up the ante with \u201cOperation Economic Outcast\u201d, targeting countries that trade with Iran as well.<\/p>\n
US Treasury Secretary Scott Bessent said<\/a> on Monday that the US would target all of Iran\u2019s sources of revenue, including oil, to prevent other countries and companies from doing business with Tehran.<\/p>\n \u201cAround the globe, our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone,\u201d he said.<\/p>\n He said countries around the world must choose between the US and Iran, stressing that the new campaign exposes Tehran\u2019s trade partners to secondary penalties.<\/p>\n Bessent added that if countries and entities \u201cfacilitate transactions and are part of the ecosystem that turns Iranian oil into money, into repression, they will be targeted\u201d, he said.<\/p>\n Asked why the US is threatening Iran\u2019s business partners instead of penalising them, Bessent said: \u201cWell, we are giving everyone the opportunity to remedy bad behaviour. Why would I want to blow up the global financial system?\u201d<\/p>\n Bessent\u2019s latest statements are a follow-up to US President Donald Trump\u2019s Truth Social post on August 19, where the president announced what he called the \u201cmost crushing economic operation\u201d against Iran.<\/p>\n \u201cANY 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,\u201d Trump wrote.<\/p>\n What are secondary sanctions?<\/p>\n The US has long used threats of what are known as secondary sanctions \u2013 in which countries that trade with a sanctioned country also face sanctions.<\/p>\n For instance, secondary sanctions are in place against the purchase of Iranian oil or heavy military equipment from Russia: countries, companies and individuals that engage in this trade are at risk of US sanctions.<\/p>\n How do they work?<\/p>\n The US\u2019s main leverage is access to its market and financial system.<\/p>\n For instance, even if an Indian bank has no direct relationship with Iran, it could face secondary sanctions if it processes payments for an Indian firm trading with Tehran, especially if that bank has US branches, dollar\u2011clearing ties or American clients.<\/p>\n That risk makes institutions hyper\u2011cautious, avoiding anything that even touches Iran for fear of being swept up in US penalties.<\/p>\n The threat of secondary US sanctions is also why most global banks and financial institutions no longer participate in trade with Russia or Iran \u2013 they do not want to risk losing business in the US.<\/p>\n How have secondary sanctions been used in the past?<\/p>\n In 2017, Trump\u2019s first administration authorised the Countering America\u2019s Adversaries Through Sanctions Act (CAATSA), targeting Iran, Russia and North Korea.<\/p>\n Under CAATSA, the US targeted specific countries with secondary sanctions. In 2018, it targeted the Equipment Development Department (EDD) of the Chinese military due to its purchases of Russian Su-35 fighter jets and S-400 missile systems.<\/p>\n In 2020, Washington used the CAATSA sanctions to target NATO-member Turkiye\u2019s<\/a> Presidency of Defence Industries, the country\u2019s military procurement agency, alongside some officials affiliated with it. This came a year after the US barred Turkiye from procuring US F-35 fighter jets.<\/p>\n Turkiye was earmarked for its purchase of the Russian S-400 air defence system in 2019. Trump\u2019s calculus was that the S-400s were incompatible with NATO equipment and a potentially threatened allied security.<\/p>\n These sanctions made Turkiye cautious about making future purchases. In July 2026, Trump said he would lift sanctions<\/a> on Turkiye and would soon decide on resuming sales of F-35s.<\/p>\n Any move to return Turkiye to the F-35 programme would need to overcome a 2020 law requiring a presidential administration to determine that Ankara no longer possesses or operates the Russian systems.<\/p>\n While the CAATSA sanctions were highly targeted, it is unclear whether any sanctions imposed on Iran\u2019s trading partners would be.<\/p>\n Who are Iran\u2019s main trading partners?<\/p>\n In 2024, Iran exported some $56bn worth of goods to at least 112 countries and territories, according to official customs figures. In the same year, Iran imported about $68.5bn worth of goods from at least 87 countries and territories.<\/p>\n Its top export partners were China, Iraq, the United Arab Emirates, Turkiye and Afghanistan. Its top import partners were the UAE, China, Turkiye, the European Union and India.<\/p>\n Washington\u2019s leverage over Iran\u2019s trading partners is contingent on the trading partners\u2019 reliance on the American financial system. For several sectors in China and Russia, this reliance is minimal. Hence, analysts say that Trump\u2019s\u00a0leverage over China and Russia<\/a>\u00a0is limited.<\/p>\n