America’s new sanctions are unlikely to topple Iran’s regime

The warnings surrounding America’s latest pressure campaign against Iran were apocalyptic. Donald Trump called an “economic D-Day” imminent, while Treasury Secretary Scott Bessent described it as “the single greatest financial offensive ever marshalled against an adversary.” Yet Operation Economic Outcast, announced on August 24, is unlikely to bring down Iran’s regime.

The operation will impose fresh sanctions on nearly 60 individuals, entities and ships, as well as five sectors of Iran’s economy, including digital assets and shipping. But Washington has so far only threatened to deploy its strongest economic weapon: secondary sanctions against countries that trade with Iran or help the regime move money.

There is a reason the administration may hesitate to use that weapon fully. China buys about 90% of Iran’s crude exports at a discount, despite existing sanctions. Forcing Chinese financial institutions to choose between access to the dollar and Iranian oil would sharply escalate Washington’s confrontation with the world’s second-largest economy. Investors would worry about the consequences for trade and finance. Bessent himself suggested that such a move could “blow up the global financial system.”

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the single greatest financial offensive ever marshalled against an adversary

A similar risk restrained the administration last year after China threatened to withhold rare-earth supplies. That history helps explain why Trump is now seeking warmer relations with Beijing. The question is whether Iran’s leaders will buckle under another campaign. Their country has already endured Trump’s “maximum pressure” policy during his first term and bombing campaigns during his second.

Sanctions and America’s blockade of the Strait of Hormuz have made life miserable for ordinary Iranians, but the regime and its elite defenders in the Islamic Revolutionary Guard Corps are likely to suffer last. The IRGC earns money through smuggling and by producing goods inside Iran that would otherwise be imported. As a result, the new campaign could strengthen the system it seeks to topple.

The operation may therefore represent an American retreat dressed in offensive language. Trump may be trying to remove Iran from the headlines after military action lost public support, with only 31% of Americans backing its continuation. Oil prices remain high but below their peak, and renewed fighting would push them higher. If the regime falls, an unlikely outcome, Trump can claim victory. If the campaign achieves little without triggering a global economic crisis, he can hope for relative calm before the November midterm elections. Iran, however, also has a say, and its leaders may be unwilling to rescue Trump from a disastrous war.

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blow up the global financial system