After nearly six months of war, Donald Trump’s administration is changing the way it applies pressure on Iran. The military campaign has inflicted heavy damage but has failed to force Tehran to capitulate. Washington is now trying to achieve through oil, currency, banks and trade what bombing has so far failed to deliver.
The shift is not purely strategic. The United States is facing constraints in some categories of munitions, while sustaining a large military campaign is becoming less attractive politically. Economic pressure offers a way to maintain confrontation without preserving the same tempo of military operations.
In Washington, the approach amounts to a return to the “maximum pressure” doctrine Trump used during his first term. The difference is that Iran is now entering that contest in a much weaker condition: parts of its industrial base have been damaged by war, crude exports are being squeezed by a naval blockade, inflation has surged and the rial has weakened.
As Daycom has previously assessed, the central question is no longer whether the United States can cause additional economic damage. It almost certainly can. The real question is whether economic pain can be converted into political concessions from a regime that has spent decades learning how to survive isolation.
The American strategy is now focused on Iran’s most important source of hard currency: oil exports. The naval blockade has already made shipments more difficult, while the Treasury Department is steadily targeting shipping networks, banks, exchange houses, front companies and alternative payment channels.
The logic is straightforward. Selling oil is only the first step. Tehran must also receive the proceeds, move payments through multiple jurisdictions, convert yuan and other currencies and ultimately turn the money into imports, budget revenue, military procurement and financing for the security apparatus.
That is why U.S. pressure is gradually moving from the tanker to the bank account.
A vessel can change its flag, name or owner. Oil can be transferred at sea. Documents can be rewritten. But the money still has to move through intermediaries, and each intermediary is a potential sanctions target.
That financial squeeze is hitting an economy already under severe strain. Inflation has climbed to extreme levels, the currency remains under pressure and damage to industrial production is compounding the loss of oil revenue.
For ordinary Iranians, sanctions are not experienced as abstract geopolitics. They appear in the cost of food, medicine, rent and imported goods. They erode savings, reduce real wages and steadily narrow the range of choices available to households.
The sharp fall of the rial earlier this year was one of the triggers for nationwide protests, which the authorities suppressed with force. Yet there has been no renewed wave of demonstrations on the same scale. That matters for Washington because economic anger does not automatically become regime collapse.
Authoritarian systems can impose costs on their populations in ways democratic governments often cannot. They can ration foreign currency, control information, prioritize funding for security institutions and suppress political organization even while living standards deteriorate.
That was one of the central weaknesses of the previous maximum-pressure campaign. After the United States withdrew from the nuclear agreement and restored sanctions in 2018, Iran suffered significant economic losses. But the regime did not abandon its nuclear program or fundamentally alter its regional strategy.
Since then, Washington has imposed thousands of sanctions-related restrictions on Tehran. Hundreds more have been added during the current campaign. The scale illustrates both the power and the limitation of the sanctions instrument: eventually, the list of obvious targets begins to run out.
Sanctions have diminishing marginal returns. Freezing a major state bank can transform financial flows. Adding another obscure front company can still matter, but the incremental effect is smaller.
At some point, stronger pressure requires the United States to target not Iran itself, but the companies, banks and governments that continue doing business with it.
That is where China becomes the decisive problem.
China absorbs the overwhelming majority of Iranian oil exports. Much of that crude goes to independent refineries attracted by discounted supplies even when sanctions raise the cost and complexity of the trade.
Washington has already sanctioned some Chinese firms involved in that commerce. As long as enforcement focuses on relatively small refineries and intermediaries, the diplomatic cost remains manageable.
The calculation changes if the Trump administration moves against large Chinese financial institutions that facilitate payments for Iranian oil.
Such secondary sanctions could sharply reduce Tehran’s ability to monetize its exports. Major banks are unlikely to risk access to the dollar system and the U.S. market for a comparatively small volume of Iranian business.
But Washington would simultaneously be opening another front with Beijing.
The timing makes that choice especially difficult. Any sanctions on large Chinese banks could turn Iran into a major bilateral dispute between the world’s two largest economies just as Washington and Beijing are trying to manage a wider set of trade and strategic tensions.
The United States can, in theory, confront foreign governments and companies with a simple choice: continue buying Iranian oil or retain comfortable access to the American market.
But that is also the point at which economic coercion begins to generate costs for the country applying it.
If secondary sanctions expand to China, India and major international financial institutions, they could trigger retaliatory measures, deepen trade disputes and accelerate efforts to build payment mechanisms outside the dollar system.
India is another possible pressure point, although its role in Iranian oil trade is much smaller than China’s. The strategic dilemma is similar: tougher enforcement could reduce Tehran’s revenue but also damage relations with a country Washington views as a critical Asian partner.
Another target is the network of financial centers around the Persian Gulf. Iran has long relied on exchange houses, trading companies and intermediaries in the region to repatriate money and circumvent formal restrictions.
That space is becoming narrower. Banks and currency brokers increasingly understand that handling Iranian funds can threaten their access to the U.S. financial system. Yet closing one channel often forces the network to migrate to another.
That is how sanctions evasion works. The tighter the controls, the longer and more expensive the chain becomes. Oil changes paperwork and vessels. Payments pass through several currencies. Companies are repeatedly reincorporated. Beneficial owners disappear behind layers of corporate structures.
Washington’s objective is therefore not necessarily to stop the final barrel of Iranian crude from leaving the country. It is to reduce the amount of usable revenue Tehran receives after discounts, intermediary fees, insurance costs, clandestine logistics and the expense of repatriating funds.
This is where the naval blockade makes the current campaign fundamentally different from earlier rounds of maximum pressure.
The Strait of Hormuz is simultaneously Iran’s greatest lever and one of its most serious vulnerabilities. Tehran has spent decades using the threat of disruption in one of the world’s most important energy corridors as a form of deterrence.
The United States is now trying to reverse that logic.
American naval power can restrict Iran’s own access to maritime trade while seeking to preserve flows needed by the rest of the global economy. That balance is difficult, because any sustained disruption around Hormuz immediately affects oil prices, freight rates and inflation worldwide.
Washington therefore has little interest in shutting the waterway indiscriminately. Its preferred outcome is selective coercion: constraining Iranian exports without creating an energy shock large enough to damage allies, consumers and the U.S. economy itself.
That makes the economic campaign not a replacement for military power, but an extension of it.
Without the American naval presence, sanctions on Iranian oil would be easier to circumvent. Without financial sanctions, the military would have to enforce far more of the blockade physically — a more expensive and dangerous task.
The strategy now combines the two. Military force creates a physical barrier. Financial pressure targets the routes that remain around it.
For the Trump administration, this approach also offers a way to reduce the domestic political cost of the war. Sanctions do not produce a daily stream of reports about American casualties, and they do not consume precision-guided munitions at the same rate as an intense bombing campaign.
But sanctions have a different weakness: they are slow.
A missile can destroy an industrial facility in minutes. Financial isolation must compress the currency market, imports, the budget and household consumption over months before the accumulated stress begins to influence political calculations.
Even then, there is no guarantee the regime will choose compromise.
Iran has already demonstrated an ability to survive prolonged isolation. North Korea and Cuba provide even more extreme examples. Economic devastation can weaken a state without changing its strategic behavior.
In some cases, external pressure can even make political mobilization easier for the government. The regime can attribute economic hardship to foreign enemies and use that narrative to justify greater internal repression and centralization.
Impoverishment also does not automatically create a viable political alternative. That is especially true when the security apparatus remains financed, organized and capable of suppressing large protests.
For that reason, the true measure of success for the renewed maximum-pressure campaign will not be inflation or the exchange rate.
Washington needs a measurable change in Iranian behavior: concessions over the nuclear program, the Strait of Hormuz or other central demands of the conflict.
So far, that has not happened.
This is why Trump’s strategy is entering its most difficult stage. Many of the obvious Iranian sanctions targets have already been used. The next level of pressure increasingly requires direct confrontation with the actors that still provide Tehran with access to oil revenue.
Above all, China.
The question facing Washington is therefore changing. At first, it was how much military punishment Iran could absorb. Now it is how much economic isolation the regime can endure — and how far the United States is prepared to go to make that isolation real.
Trump is betting that Tehran will reach its limit first.
But the real test of maximum pressure will not come when bread becomes more expensive in Iran or the rial falls to another record low. It will come when Washington must decide whether closing the remaining major channels of Iranian revenue is worth applying serious economic pressure not only on Tehran, but on Beijing as well.
