Trump’s economic isolation plan risks Iran strikes across Gulf

President Donald Trump is betting new sanctions, a naval blockade and ramped-up economic pressure against Iran’s trading partners can accomplish what thousands of bombs and missiles could not: force Tehran to accept a deal to end the war on US terms.

But like other US efforts to force Iran into capitulation, there’s one main problem: Iran’s Islamic Revolutionary Guard Corps, which has claimed control of the vital Strait of Hormuz and sent volleys of attack drones across the Persian Gulf, may be impervious to such pressure — and has plenty of ways to retaliate.

ALSO READ | Trump calls Strait of Hormuz ‘American territory’, warns Iran over nuclear arms


A key part of the US effort will come on Monday, when Treasury Secretary Scott Bessent has promised to unveil details of a plan designed to shift the conflict from tit-for-tat strikes across the Middle East to full-blown economic isolation — a campaign that could touch nations ranging from China and India to Turkey and the United Arab Emirates.


Yet significant new economic pressure is likely to prompt Iran to retaliate with military strikes across the Gulf — including against energy infrastructure — in an attempt to push up oil prices and raise the cost of the US effort, forcing Trump to shift his approach once again.

“If this is actually effective, at some point, Iran will lash out again — they just will have no alternative,” said Nate Swanson, a senior fellow at the Atlantic Council who worked on Iran issues at the State Department and White House National Security Council until last year. “Trump may see this as a different phase of the war, but I don’t think Iran does.”

Since the US and Israel first attacked Iran on Feb. 28, Iran has repeatedly shown the ability to endure airstrikes on thousands of targets, layers of sanctions and a US Navy blockade — yet still retain the ability to hit back.

Tehran has used Shahed attack drones and ballistic missiles to hit both US bases and civilian sites across the Gulf, including water and power infrastructure. That has kept Hormuz largely shut, raised global energy prices and forced wealthy Gulf nations to lobby the US into finding a diplomatic offramp to the unpopular conflict.

Iran’s grip on Hormuz also gives it immense leverage in any potential talks with the US.

Bessent suggested this week that the shift to an economic campaign “means that likely there will not be a large-scale kinetic restart.” But analysts aren’t so sure that Iran will refrain from a return to open hostilities, even if the US does.

Read more: What Bessent’s Economic Isolation of Iran Could Look Like

“If this new economic pressure campaign works — and that’s a big if — it’s more likely that we would see military action coming out of Iran than that we would see capitulation, at least as a first step,” said Chris Kennedy, the economic statecraft lead at Bloomberg Economics. “Just because the US has decided to pause its full-blown military operation doesn’t mean Iran will follow suit.”

It’s not clear exactly how the US could meaningfully ramp up economic pressure on Iran, other than going after China — the main buyer of Iranian oil — and risking blowback. Going after smaller entities in countries such as Iraq, Turkey or the UAE would be unlikely to break Tehran’s will.

Still, the US economic pressure campaign is having an impact. It now risks triggering one of Iran’s worst ever economic crises, despite the country weathering years of broad isolation.

Even before the war, a slump in the Iranian rial triggered nationwide protests, with the government killing thousands. Since the war began, the nation’s citizens have seen their purchasing power evaporate under inflation that’s now above 80% and with a currency that’s lost almost 30% of its value this year alone.

This week, Iran’s central bank governor said the nation’s oil exports had “virtually stopped” under the US blockade, ending the government’s main source of revenue. The International Monetary Fund said in April it expected Iran’s economy to shrink 6.1% this year, the worst contraction in decades.

On Friday, Iranian President Masoud Pezeshkian urged an end to the war with the US. But his responsibilities are mostly limited to domestic economic policy, while hardline Iranian officials, including some in the nation’s powerful military leadership, have argued that Iran is winning and should continue the fight.

It’s possible the new measures Bessent will announce on Monday and the ongoing naval blockade will eventually spur Iran to return to the interim diplomatic deal it reached with the US in June, said David Schenker, a US diplomat for the Middle East during Trump’s first term.

But it could take six months for any measures to have a significant impact, testing the patience of the Trump administration, he said, noting the Iranian regime has shown it can endure major economic pain while largely ignoring the suffering of the nation’s people.

“It could drag on for some time,” said Schenker, now a fellow at the Washington Institute for Near East Policy. “The Iranian regime still sees itself as having leverage and being in a good position.”