Nicole Jeffrey
When U.S. Treasury Secretary Scott Bessent promises “unprecedented” economic pressure on Iran, the obvious question is not whether Washington has the tools to hurt Tehran. It does.
The harder question is how much further the United States can go without hurting its own interests.
Iran is already operating under thousands of sanctions and a U.S. naval blockade. Washington has targeted Chinese refiners, companies involved in Iranian oil trading and financial networks that help Tehran move money around the world.
Yet Iran continues to sell oil, receive payments and find alternative channels around the formal financial system.
That leaves Washington with increasingly powerful — and increasingly expensive — options.
China sits at the center of the problem. It purchases more than 90% of Iranian oil exports. Washington could therefore inflict considerably greater damage on Tehran by targeting the major Chinese financial institutions supporting that trade.
But doing so would transform an Iran sanctions campaign into a confrontation with Beijing.
That calculation is particularly sensitive ahead of the expected meeting between President Donald Trump and Chinese President Xi Jinping. The administration would effectively have to decide whether squeezing Iran is important enough to risk disrupting its broader economic relationship with China.
Oil creates another dilemma.
Removing more Iranian barrels from international markets would deprive Tehran of revenue. But those barrels are also part of global supply. Eliminating them could push already elevated oil prices higher, transferring part of the cost of sanctions from Iran to American consumers and the global economy.
Secondary sanctions present similar complications.
Washington could threaten foreign banks and companies with exclusion from the U.S. financial system if they continue dealing with Iran. Such measures would place enormous pressure on Tehran, but they would also hit businesses in China, Russia and neighboring countries — including U.S. partners such as Turkey.
Even Iran’s financial workarounds demonstrate the limits of conventional sanctions.
Tehran relies on exchange houses and intermediaries, including networks in Gulf states, to convert payments received in yuan into currencies it can use elsewhere. Closing one channel does not necessarily stop the money. It can simply push transactions toward another intermediary, currency or digital asset.
This is the paradox confronting Bessent.
The United States still possesses weapons capable of inflicting serious economic damage on Iran. But the strongest ones no longer target Iran alone.
They run through Chinese banks, global oil markets, regional trading partners and international financial networks.
The question, therefore, is no longer how much economic pressure Washington can impose on Tehran.
It is how much collateral economic pressure Washington is prepared to absorb in order to make that pressure effective.