Iran wary of more economic pain: What else could the Trump administration do?
US-Iran war: Iran was already facing high inflation, a weakening currency, energy shortages, sanctions and structural economic problems when the war began. The conflict has since damaged infrastructure, disrupted trade and production and increased the cost of rebuilding.
- Aug 18, 2026,
- Updated Aug 18, 2026 8:29 AM IST
US-Iran war: Iranians are growing wary that tougher economic sanctions threatened by US President Donald Trump could deepen their economic hardship, reignite unrest and further weaken the Islamic Republic’s legitimacy, even as Tehran projects resilience after nearly six months of war with Washington.
Trump vowed to hit Iran hard economically, a day after Treasury Secretary Scott Bessent said Washington would impose measures on Tehran that have “never been seen” as early as next week. The US has not specified what those measures will entail.
Iran was already facing high inflation, a weakening currency, energy shortages, sanctions and structural economic problems when the war began. The conflict has since damaged infrastructure, disrupted trade and production and increased the cost of rebuilding.
Annual inflation reached 66% in July, while consumer prices were 87.9% higher than a year earlier. Food inflation stood at 128%. Rents rose 31% year-on-year in March, while the rial’s depreciation has reduced the purchasing power of workers despite a roughly 60% increase in the minimum wage.
Iranian officials and residents told Reuters that the greater concern for the leadership is that worsening economic conditions could trigger another wave of nationwide protests. Economic grievances have repeatedly fuelled unrest, including protests crushed by security forces in January.
President Masoud Pezeshkian acknowledged the pressure last week, saying Iran’s problems had multiplied while its income had fallen. Alternative routes through land corridors and the Caspian Sea are under strain, while strikes on bridges have disrupted overland transport.
The US has already imposed additional maritime, energy and financial sanctions since the war began in February, alongside a naval blockade. The Treasury’s Office of Foreign Assets Control has sanctioned more than 1,000 people, vessels and aircraft since Trump began his second term.
TRUMP'S OPTIONS
One option is to target Chinese independent “teapot” refineries that absorb much of Iran’s oil exports. China buys more than 80% of Iran’s shipped oil, with independent refiners accounting for a significant share. Washington could impose secondary sanctions on these buyers, although their limited exposure to the US financial system makes them harder to pressure.
The US could also sanction Chinese banks involved in processing Iranian oil revenues or weapons-related transactions. Such a move could pressure larger financial institutions but risks retaliation from Beijing.
Washington could further expand sanctions against Iranian and foreign companies helping Tehran evade restrictions. Experts describe this as a “whack-a-mole” strategy because Iran has repeatedly created new entities to replace sanctioned ones.
Further aviation sanctions are another possibility, particularly as shipping through the Strait of Hormuz has been blocked.
MUST READ | Who controls the Strait of Hormuz? US says Washington, Iran says Tehran
Some US and Israeli officials have also floated a land blockade involving Iran’s neighbours. Such a move could restrict imports of food, energy and textiles, but experts say it would be difficult to implement and might not necessarily trigger unrest.
Trump has also threatened tariffs against countries trading with Iran, while a Senate-passed sanctions bill could give him new tariff powers. The legislation still needs approval from the House.
US-Iran war: Iranians are growing wary that tougher economic sanctions threatened by US President Donald Trump could deepen their economic hardship, reignite unrest and further weaken the Islamic Republic’s legitimacy, even as Tehran projects resilience after nearly six months of war with Washington.
Trump vowed to hit Iran hard economically, a day after Treasury Secretary Scott Bessent said Washington would impose measures on Tehran that have “never been seen” as early as next week. The US has not specified what those measures will entail.
Iran was already facing high inflation, a weakening currency, energy shortages, sanctions and structural economic problems when the war began. The conflict has since damaged infrastructure, disrupted trade and production and increased the cost of rebuilding.
Annual inflation reached 66% in July, while consumer prices were 87.9% higher than a year earlier. Food inflation stood at 128%. Rents rose 31% year-on-year in March, while the rial’s depreciation has reduced the purchasing power of workers despite a roughly 60% increase in the minimum wage.
Iranian officials and residents told Reuters that the greater concern for the leadership is that worsening economic conditions could trigger another wave of nationwide protests. Economic grievances have repeatedly fuelled unrest, including protests crushed by security forces in January.
President Masoud Pezeshkian acknowledged the pressure last week, saying Iran’s problems had multiplied while its income had fallen. Alternative routes through land corridors and the Caspian Sea are under strain, while strikes on bridges have disrupted overland transport.
The US has already imposed additional maritime, energy and financial sanctions since the war began in February, alongside a naval blockade. The Treasury’s Office of Foreign Assets Control has sanctioned more than 1,000 people, vessels and aircraft since Trump began his second term.
TRUMP'S OPTIONS
One option is to target Chinese independent “teapot” refineries that absorb much of Iran’s oil exports. China buys more than 80% of Iran’s shipped oil, with independent refiners accounting for a significant share. Washington could impose secondary sanctions on these buyers, although their limited exposure to the US financial system makes them harder to pressure.
The US could also sanction Chinese banks involved in processing Iranian oil revenues or weapons-related transactions. Such a move could pressure larger financial institutions but risks retaliation from Beijing.
Washington could further expand sanctions against Iranian and foreign companies helping Tehran evade restrictions. Experts describe this as a “whack-a-mole” strategy because Iran has repeatedly created new entities to replace sanctioned ones.
Further aviation sanctions are another possibility, particularly as shipping through the Strait of Hormuz has been blocked.
MUST READ | Who controls the Strait of Hormuz? US says Washington, Iran says Tehran
Some US and Israeli officials have also floated a land blockade involving Iran’s neighbours. Such a move could restrict imports of food, energy and textiles, but experts say it would be difficult to implement and might not necessarily trigger unrest.
Trump has also threatened tariffs against countries trading with Iran, while a Senate-passed sanctions bill could give him new tariff powers. The legislation still needs approval from the House.