President Donald Trump, who has long argued that decades of economic pressure failed to curb Iran’s nuclear ambitions, is now turning back to financial pressure in hopes of ending the war with Tehran.
The Trump administration believes months of U.S. bombing have pushed Iran’s economy close to a breaking point and could force its leaders to accept demands to abandon its nuclear program and fully reopen the Strait of Hormuz to oil and natural gas tankers.
Trump said Monday that because Iran is seeking compensation as part of any peace agreement, the United States would also seek compensation. His remarks came as he increasingly portrayed Iran as being on the verge of financial collapse, despite the country having faced U.S. sanctions for decades. Such sanctions are generally viewed as a long-term pressure tool rather than an immediate means of ending a war.
The shift comes as U.S. supplies of some key weapons have declined and intermittent negotiations appear to have stalled again. Trump, however, maintains that increased pressure could produce a breakthrough.
“Yeah, they can make trouble, but they’re broke,” Trump told reporters. “They have no money. You know, Iran is broke, totally broke. And, they’re not paying their soldiers. They have inflation of 300%.”
Iran is experiencing high inflation, although Trump’s estimate is above figures administration officials have cited. A prolonged conflict also threatens to fuel inflation elsewhere, including in the United States, where the war and rising gasoline prices have become unpopular.
Crude oil prices rose Monday after investors interpreted Trump’s comments as suggesting that fewer vessels would be able to pass through the Strait of Hormuz, further restricting global supplies of gasoline, jet fuel, natural gas and other energy products.
The waterway, through which about 20% of the world’s oil supplies moved before the conflict, has been largely closed since the war began. Efforts to reopen it have been short-lived, as Iran has increasingly used access to the strait as leverage in negotiations.
Iran, meanwhile, has shown little public concern about the prospect of additional sanctions.
“Whenever Washington proves itself incapable of pursuing diplomacy, it retreats into sanctions; and whenever those sanctions fail to produce results, it simply increases the dose,” Iranian Foreign Ministry spokesman Esmail Baghaei said on social media.
He warned that continued reliance on sanctions could further reduce Washington’s chances of finding a way out of the crisis.
White House calls sanctions effort Operation Economic Fury
Trump did not specify what new financial measures he might impose. However, his administration has been carrying out what it calls “Operation Economic Fury” against Iran since April 16.
Treasury Secretary Scott Bessent has described the campaign as the “financial equivalent” of a bombing operation, with countries that purchase Iranian oil or conduct financial transactions with Iran potentially facing sanctions.
One challenge for the strategy is that sanctions cannot produce effects as quickly as the closure of the Strait of Hormuz, said Richard Nephew, a senior research scholar at Columbia University who helped oversee Iran sanctions policy during the Obama administration.
Nephew said the effectiveness of sanctions is also limited because Trump has not clearly defined the strategic objectives of the war. At different times, Trump has focused on preventing Iran from obtaining a nuclear weapon, reopening the strait and curbing its ballistic missile program.
Instead, Trump has launched an extensive aerial campaign that has caused significant destruction without bringing the swift end to the conflict he initially promised.
“Economic pressure is a possible element in his strategy, but he’s yet to explain the purpose,” Nephew said. He argued that Trump has weakened his own position through what he described as inadequate use of force, unclear objectives and shifting positions on negotiations.
Still, sanctions and the continuing U.S. naval blockade of Iranian ports provide Washington with significant economic and financial leverage, said Juan Zarate, a former deputy national security adviser under President George W. Bush.
Zarate said U.S. sanctions against third countries doing business with Iran could also have an impact, although such measures take time to work.
“The ultimate question will be how far the United States is willing to go to constrict Iran’s oil trade and threaten third countries with severe sanctions — and whether it has the patience to test whether the economic pain will change the regime’s behavior,” Zarate said.
Trump has criticized previous sanctions
Trump’s renewed emphasis on economic pressure represents a shift from his previous criticism of sanctions-based approaches toward Iran.
He has repeatedly argued that sanctions imposed by previous administrations did not go far enough to prevent Iran from developing its military and nuclear capabilities.
Speaking last week in Las Vegas, Trump defended the bombing, missile and drone campaign that began Feb. 28, saying economic sanctions imposed on Iran since November 1979 had failed to achieve their objective.
“It’s been 47 years, but really, it’s been 50 years because they’ve been saying 47 for three years, it’s been 50 years,” Trump said. “And no other president has done what you should have done a long time ago, because Iran cannot have a nuclear weapon, can’t have it.”
The Iranian economy has been badly affected by the war. The International Monetary Fund estimates that Iran’s overall economy will contract by 5.4%, while the Iranian government recently reported an annual inflation rate of 88.6%.
The U.S. Treasury Department said average Iranian oil shipments have fallen from 1.8 million barrels per day before the war to less than 500,000 barrels per day over the past month.
The U.S. economy, meanwhile, has continued to expand, although inflation remains elevated and borrowing costs have increased. Those pressures have hurt Trump’s popularity and contributed to public disapproval of the war with Iran.
A senior U.S. official, speaking on condition of anonymity to discuss the administration’s strategy, said U.S. military action has reduced Iran’s ability to produce, sell and transport oil and other energy resources.
The administration considers the naval blockade and sanctions effective and believes Trump has additional measures that could be intensified over the coming weeks and months.
Trump is effectively arguing that Americans are better positioned to withstand economic difficulties than Iranians, who have faced years of economic hardship.
“It’s not just what the military can do — we’ve got the most powerful economy in the world as well,” Defense Secretary Pete Hegseth said Monday alongside Bessent. “And when you’ve got a motivated treasury secretary who can pull a lot of levers because he knows how to do it, you can put a lot of pressure on adversaries.”