The Pentagon may have ceased its offensive in Iran for now, but the latest front in President Donald Trump’s war on the dictatorship is global. In what Treasury Secretary Scott Bessent has branded “economic D-Day” for Iran, the Treasury Department is launching a sweeping sanctions regime targeting not the long-ostracized regime, but rather the third parties who continue to trade with Tehran.
The strategy sounds so obvious that observers may wonder why it hasn’t been done before. And indeed, the strategy of forcing our ostensible friends to unite and economically isolate American enemies is obvious enough that it’s clearly what the White House should have done from the start of its Liberation Day quest to renegotiate global trade. But the reason it may have taken so long for Bessent to finally take Iran’s trading partners to task is because of what a heavy ask Operation Economic Outcast will necessitate in practice, if taken as seriously as the Treasury promises.
Recommended Stories
The top target of OEO is China. Before Operation Epic Fury, China was importing around 1.5 million barrels of oil per day from Iran, accounting for some 90% of the regime’s exports. Even with Iran’s supply chains forced overland, the Chinese Communist Party imported 823,000 bpd in July, according to Kpler, the data analytics platform. Bessent’s operation is taking a stake to the heart of China’s oil arbitrage, which uses the Iranian oil purchased at a massive discount to funnel it to Shandong’s teapot refineries.
The secondary practical target is Turkey. While Ankara has skated by as a fair-weather NATO ally for a decade now, it has imported 13% of its natural gas from Iran. The United Arab Emirates, historically one of Iran’s top trading partners, has suspended its economic ties to the regime. But Iraq has persisted in its $12 billion in trade with Iran.
We fully expect enemies like Russia to engage in annual billion-dollar trades with Iran, but the European Union? The bloc, which hasn’t stopped purchasing Russian oil even as the United States foots the bill to fight for Ukraine’s survival, still traded billions with Iran last year.
Taken literally, OEO presents an ultimatum to China, the EU, and every other nation that sends a single dollar to Tehran: Their banks can either trade with the Iranians or bank with America. The implications of this ultimatum are spectacular.
Targeting Iran financially — and expecting US allies to do the same
To illustrate the second-order effects of OEO, consider Bank Saderat Iran. Although our Treasury Department has sanctioned Bank Saderat for 20 years and designated it a terrorism sponsor for nearly 19 years, the bank continues to operate branches in Paris, Venice, and London. It’s one thing for the Taliban to allow Bank Saderat to keep two branches in the ruins of Kabul. But our NATO allies?
Now, OEO expects that France and Italy will close their Bank Saderat branches in due course, or else any other entity enabling Saderat’s operations, including other French banks, companies, and clearing houses, could face secondary sanctions by the U.S. government. The Washington Examiner understands that while the Treasury will not be sanctioning foreign governments themselves, the White House expects other nations to fully comply and share intelligence to ensure “zero leakage.”
The biggest unknown variable is what happens after the “cure period” that Bessent will allow before enforcement. It’s easy to imagine that the Europeans and our Gulf allies fall in line: The United Kingdom, Japan, and Bahrain have already voiced their support for the operation. And after Trump tore up the remaining shreds of the Joint Comprehensive Plan of Action in 2025, European nations did begin to crack down on Iranian banking — for example, Germany revoked Saderat’s licenses as part of the resumption of snapback sanctions — so presumably plenty of allies will follow suit once more and ensure such institutions are, as Bessent said, “shuttered and dark.” But will the Chinese play ball?
There’s the rub. The CCP officially says it does not recognize the sanctions threat as legitimate, and given the current doldrums of the Chinese economy, Beijing won’t have much fiscal margin to chase out its penultimate real reservoir of discounted oil after. But if the administration is as serious as it sounds about enforcement, it could suffocate Iran without firing a single extra shot. The timeline is not fixed, and individual deadlines for countries vary, but the Treasury should be announcing enforcement starting this month, with talks coming to a head during Miami’s Group of 20 meeting later this year.
After all, the regime may have a loosening grasp on the Strait of Hormuz, but its control may be unraveling at home. The Islamic Revolutionary Guard Corps operatives responsible for controlling the population are going increasingly unpaid, the rial has plummeted to new all-time lows, and oil exports have fallen from 1.85 million bpd at the start of the war to 248,000 bpd. If Trump lets the Treasury take its mandate seriously, the power of the U.S. dollar could finish the job.
Tiana Lowe Doescher (@TianaTheFirst) is an economics columnist for the Washington Examiner.
