Can Iran survive Trump’s ‘Economic D-Day’?

The United States is preparing to unleash what US Treasury Secretary Scott Bessent has described as the “greatest financial offensive ever marshalled” against Iran, raising the stakes in a six-month-old conflict that has already battered Tehran’s economy and pushed global trade and energy markets into a void.

US President Donald Trump has promised what he calls an “Economic D-Day” against Iran, with Washington expected to announce a new package of sanctions on Monday.

The measures are expected to go beyond existing restrictions by targeting the countries, financial institutions, businesses, shipping networks and intermediaries that continue to provide Tehran with access to international commerce.

For Iran, the threat comes at an especially difficult moment. The country entered the conflict with high inflation, a weakening currency, energy shortages and decades of sanctions.

Months of fighting have added damaged infrastructure, disrupted trade, higher shipping costs, lost production and enormous reconstruction requirements to that burden.

At the same time, Tehran continues to possess enough missile and drone capability to threaten Gulf states and maritime traffic, while the precise condition of its nuclear programme remains unclear.

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What is Trump’s ‘Economic D-Day’?

The Trump administration has presented the coming measures as potentially the most aggressive economic campaign yet directed at Iran.

In an opinion piece published in the Financial Times on Sunday, Bessent wrote, “At dawn begins an economic D-Day — the single greatest financial offensive ever marshalled against an adversary.”

Trump has separately announced what he called the “most crushing economic operation ever taken against any country”. He has warned countries that continue providing Tehran with economic support that they too could face consequences from Washington.

“Oil smuggling, swap lines, cash transfers, exchange houses, ship registries, front companies — it all needs to stop NOW,” Trump wrote on Truth Social.

The administration’s approach appears designed to target the infrastructure that allows Iran to circumvent conventional sanctions. Rather than focusing solely on Iranian entities, Washington is threatening businesses and institutions in other countries that continue to facilitate Iranian trade.

Bessent has said Washington will impose the “toughest sanctions in history” on Iran and warned that countries continuing to conduct business with Tehran could face US enforcement action. “It is going to work in Iran and we are going to collapse this regime,” Bessent said.

He has also indicated that the United States could target countries whose institutions remain involved with the Iranian economy. China is particularly important in this regard because it purchases the overwhelming majority of Iran’s shipped oil.

Bessent had previously urged Beijing to cooperate with Washington, highlighting China’s historic dependence on Gulf oil. However, a spokesperson for China’s embassy in Washington responded, stating that “sanctions and pressure do not help resolve the problem,” while advocating diplomacy.

Bessent has portrayed the economic campaign as part of a broader strategy designed to reduce Tehran’s ability to sustain the confrontation.

He described maximum economic pressure and the US naval blockade as a “one-two punch”, suggesting that economic pressure could reduce the need for another major phase of military action.

Iran, however, has rejected Washington’s strategy outright. Iranian Foreign Minister Abbas Araghchi described the latest American announcement as “doubling down on failed policies”, while Iran’s Foreign Ministry labelled the campaign “economic terrorism” and a “crime against humanity”.

Tehran has insisted that it will continue resisting American pressure.

How badly has Iran’s economy already been hit?

The most important question surrounding Trump’s strategy is not whether Iran can be hurt economically. It already has been.

The country had spent years coping with sanctions before the latest war began. Inflation, currency weakness, energy shortages and structural economic problems had already damaged household purchasing power.

The conflict has just added on to the economic disruption. Iranian economic reporting has highlighted rising freight costs, difficulties obtaining medicines, higher prices for imported inputs and mounting pressure on household budgets.

Emergency allocations from Iran’s Central Bank have allowed wheat and pharmaceutical imports to be cleared around the clock at Shahid Rajaee Port in Bandar Abbas.

Yet reports by ILNA and Donya-ye Eghtesad said container freight rates remained 35 to 40 per cent above baseline because of continuing war-risk surcharges.

That increase matters beyond the shipping sector. More expensive transportation raises the cost of imported raw materials and intermediate goods, feeding into domestic production costs and ultimately consumer prices.

Donya-ye Eghtesad has argued that temporary customs measures cannot solve the deeper problem because insurance costs and port congestion continue to raise the cost of bringing goods into the country.

“So long as transit protocols remain uncodified,” the daily wrote, “industrial input costs will remain elevated, eroding domestic purchasing power daily.”

The pressure is particularly severe in the pharmaceutical sector.

A major Tehran pharmaceutical company said the government could no longer provide the foreign currency it needed at subsidised rates. The company warned that certain medicines could disappear from shelves or become two to three times more expensive.

Inflation has already reached extraordinary levels. Iran’s 12-month inflation rate stood at 66 percent in July, while food prices were 128 percent higher than a year earlier.

For ordinary households, the consequences are increasingly difficult to absorb.

Cooking oil, meat and dairy products have become unaffordable for many working- and middle-class families. Iranian reports indicate that households are cutting consumption of staples and reducing non-essential expenditure.

The cost of meat illustrates the scale of the problem. A kilogramme of lamb can account for as much as 10 percent of the monthly income of a minimum-wage worker.

Housing has also become a growing burden. Rents have climbed sharply in Tehran, Mashhad and Isfahan despite nominal government limits, increasing housing insecurity and pushing some households towards cheaper neighbourhoods or shared accommodation.

The squeeze extends into professions that traditionally provide relatively stable incomes. Iranian reports describe teachers, civil servants and office workers taking multiple jobs while still struggling to maintain their previous standard of living.

Peripheral provinces such as Ilam, Sistan-Baluchestan and Kurdistan face even more severe economic difficulties.

This means the new American sanctions would not be hitting an economy operating from a position of strength. They would be landing on a system already weakened by years of sanctions and months of war.

Can Iran still use the Strait of Hormuz as economic leverage?

Iran’s most powerful remaining economic weapon may be its ability to threaten shipping through the Strait of Hormuz. The strategic waterway is crucial to global energy markets, and Iranian missile and drone capabilities have allowed Tehran to threaten Gulf neighbours and commercial shipping.

The resulting disruption has brought traffic through the waterway close to a near standstill and contributed to pressure on global fuel prices. Iran has now warned that continued economic warfare could produce an even more dramatic response.

Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, said Tehran could halt oil exports from the Gulf if Washington continued its economic campaign.

“If the economic war continues, not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf,” Rezaei wrote in a social media post.

“Iran will regard any country’s participation in or support for America’s economic war against the Iranian people as an act of war.”

However, Iran’s ability to use Hormuz as leverage may itself be weakening.

CNN previously reported that more than 80 per cent of recent liquid cargo movements through the Strait had either used the Omani route or travelled with their transponders switched off and were likely following that route.

Axios also reported that the US military was operating a shipping corridor along the Omani side of the Strait, assisting between 15 and 20 tankers entering or leaving the Persian Gulf each night.

If those arrangements continue, Tehran could face an uncomfortable situation which is bearing the economic consequences of disrupting shipping while gaining less leverage from the disruption itself.

The issue has also become relevant to Iran’s discussions with Oman. Iranian Foreign Ministry spokesman Esmaeil Baghaei said Iranian and Omani technical teams had agreed on geographic coordinates and navigation lanes for a proposed shipping arrangement.

For Iran, formalising such an arrangement could help reduce insurance costs and shipping disruptions.

But if the United States can increasingly facilitate shipping along the Omani side without giving Tehran a central role, the strategic value of the Strait as a bargaining instrument could decline.

That would remove one of the important sources of pressure Tehran has been able to apply during the confrontation.

Can allies help Iran survive?

The effectiveness of Trump’s economic campaign will depend heavily on whether Washington can persuade countries outside Iran to sever their remaining commercial links with Tehran.

China is the most important test. According to 2025 data from Kpler, China purchased more than 80 per cent of Iran’s shipped oil.

Independent Chinese refineries, commonly known as “teapots”, have previously absorbed Iranian crude, while non-dollar payment arrangements can help reduce exposure to US financial restrictions.

That makes China both a crucial economic lifeline for Tehran and a major challenge for Washington.

If the United States imposes sweeping secondary sanctions against Chinese institutions, the consequences could extend far beyond Iran. China is a major exporter to the United States and is also important to global supply chains, including strategically significant rare-earth minerals.

India and Turkey present another challenge. Both maintain significant relationships with Washington, but they have historically followed independent positions on unilateral sanctions that lack explicit United Nations Security Council backing.

Their decisions could therefore provide an indication of whether Washington can successfully extend the campaign beyond Iran and its closest trading partners.

Europe faces a similar dilemma. Governments such as Germany share American concerns over Iran’s nuclear ambitions and regional security, including threats to maritime trade.

But European companies could become vulnerable to US penalties if Washington uses secondary sanctions to punish legitimate commercial activity with Iran.

The UAE has already taken a major step. On August 18, the UAE announced the suspension of trade activities, commercial exchanges and financial transactions with Iran until further notice.

The decision is particularly important because Dubai has historically served as a major commercial and financial gateway for Iranian businesses.

Restricting that channel could make it considerably harder for Iranian companies to reach international markets, financial services and commercial intermediaries.

But the UAE faces its own security dilemma. The country hosts a major US military base, while Iran has warned that Gulf states providing bases, intelligence or logistical assistance to American forces could see their infrastructure treated as potential targets.

That leaves regional governments caught between competing pressures.

Will Trump’s economic pressure force Iran to negotiate?

The big question is whether economic isolation will change Iran’s political calculations.

Washington appears to believe that a combination of military pressure, financial restrictions and logistical disruption could leave Tehran with no sustainable alternative to negotiations.

The US also has increasingly sophisticated tools for monitoring sanctions evasion. Blockchain analysis, satellite imagery and other tracking technologies can potentially help American authorities identify financial transactions, shadow shipping networks and dark-fleet operations.

If Washington succeeds in persuading banks, insurers, shipping companies, ports and commercial intermediaries to withdraw from Iranian business, Tehran could find access to hard currency increasingly difficult.

But Iran has decades of experience living under sanctions. Tehran has developed networks based on intermediaries, alternative currencies, barter arrangements and other mechanisms intended to reduce dependence on Western financial systems.

Closing one route may therefore simply encourage the creation of another.

China and Russia could prove particularly important. If Beijing regards broad secondary sanctions as a threat to its energy security or national sovereignty, it could expand alternative mechanisms for Iranian trade.

Russia’s economic and military relationship with Iran could also provide Tehran with additional routes, including through the Caspian region, that would be harder for Washington to disrupt through naval pressure.

There is another danger for the United States which is maximum economic pressure could encourage escalation rather than compromise.

If Iran’s leadership concludes that sanctions have eliminated any realistic prospect of economic relief, Tehran could determine that confrontation offers a better option than compromise.

That could mean greater reliance on asymmetric warfare, drones, ballistic missiles and pressure against maritime routes.

Any renewed attacks on commercial shipping, oil infrastructure or regional facilities could send energy prices higher and create pressure for a wider diplomatic settlement.

The two sides have not conducted meaningful face-to-face negotiations since their last talks in June in Switzerland. Other countries, including Qatar, Pakistan and Turkey, have attempted to facilitate diplomacy.

With inputs from agencies