US President Donald Trump speaks during a meeting with technology sector leaders in the Roosevelt Room of the White House in Washington on Wednesday. [AP]
US President Donald Trump speaks during a meeting with technology sector leaders in the Roosevelt Room of the White House in Washington on Wednesday. [AP]

US President Donald Trump declared an "unprecedented" campaign of economic isolation against Iran, warning that third-country governments, companies and financial institutions that help Tehran circumvent sanctions will face severe economic consequences — in effect demanding that the entire world cut ties with Iran. The move has put China, which has continued to import discounted Iranian oil despite US sanctions, at the center of attention as the most consequential potential target of secondary measures.

On Wednesday, Trump announced on Truth Social that he was launching "the most devastating economic operation ever taken against any country," saying no one had given Iran more chances to reach a deal. "Tragically, they missed that opportunity," he wrote.

He described the measures as "an economic war and isolation campaign of unprecedented scale."

Trump directed his warning not only at Iran but also at any country that enables Tehran to evade sanctions. "Any nation that allows its financial institutions, companies, airports or government agencies to provide any form of lifeline to Iran will pay a massive economic price," he said.

He specifically named the methods Iran has used to fund itself in defiance of US sanctions — oil smuggling, currency swaps, cash transfers, ship registrations and the use of shell companies — and urged that all such activity "must stop immediately."

The sharpest focus falls on China. Beijing has continued to import Iranian oil at discounted prices despite US sanctions, serving as Iran's most important financial lifeline.

If Trump follows through on his pledge to penalize third countries that sustain Iran economically, Chinese government bodies, companies and financial institutions could find themselves subject to US secondary sanctions.

Whether Washington will actually impose sweeping measures on China remains uncertain, however. Directly targeting Beijing risks reigniting US-China trade tensions and inflicting costs on the American economy as well. Isolating Iran economically requires Chinese cooperation, yet compelling that cooperation would itself carry a significant price — a dilemma the administration has yet to resolve.

Trump declared Wednesday an economic "D-Day" for Iran and called on US allies to join the effort.

"I urge all allies to join the United States in isolating and defeating Iran," he said. "These historic measures will neutralize them and their ability to spread terror around the world. Iran will never have a nuclear weapon."

The UAE was the first country to respond to Washington's pressure. UAE President Mohamed bin Zayed Al Nahyan announced Tuesday — after a phone call with Trump — that the country would halt all trade, commercial and financial dealings with Iran.

The UAE, and Dubai in particular, has long served as one of Iran's primary conduits for foreign trade and finance. Tens of thousands of Iranian nationals live there, and substantial Iran-linked capital is invested in the country. A web of financial and trade networks designed to circumvent US sanctions has also taken root there, meaning genuine enforcement of the UAE's announced cutoff could deal a serious blow to the Iranian economy.

Turkey, another country identified as a key route for Iranian sanctions evasion, could also come under US pressure.

The Trump administration's shift back from military pressure toward economic sanctions reflects what analysts see as a recognition that negotiations with Iran have effectively stalled. Washington attempted back-channel talks through intermediaries after a ceasefire MOU with Iran was rendered largely ineffective, but failed to achieve a breakthrough.

Trump drew a line Wednesday, saying there were "no ongoing consultations or talks with Iran, and none are scheduled." Having concluded that a negotiated solution is out of reach, the administration appears to have returned to a "maximum pressure" strategy — simultaneously choking off Iranian oil exports, financial transactions and sanctions-evasion networks to extract concessions on Tehran's nuclear program and other issues.

Skepticism remains, however, over whether economic sanctions can change Iran's behavior. Tehran has spent years adapting to US pressure, building trade and financial structures specifically designed to work around sanctions.

Suzanne Maloney, an Iran expert at the Brookings Institution, told The New York Times that success would require American resilience to outlast the Iranian government. "It's uncertain whether that's a good bet," she said, adding that "Iran's economy has been restructured to withstand US economic pressure."

Vali Nasr, a professor at the Johns Hopkins School of Advanced International Studies, said Iran was "betting that absorbing losses now and squeezing the global economy and Trump will get it a better deal."


sjy@heraldcorp.com