Trump threatens 'economic warfare' on Iran & penalties for countries helping it evade sanctions

U.S. President Donald Trump has threatened financial penalties on any nation that helps Iran evade sanctions, calling it the "most crushing economic operation ever taken against any country".

In a Truth Social post on Aug. 20, Trump said: "This will be economic warfare and isolation on an unprecedented scale."

"No one has given the Islamic Republic of Iran a greater opportunity to make a deal than me. Tragically, for them, they have failed to take it."

Trump claimed that Iran was "hanging by a thread" and that "their navy is gone, their air force is destroyed, their military factories are now rubble, their currency is worthless".

'Tremendous economic consequences'

Trump said: "Any country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face tremendous economic consequences."

Trump wanted "oil smuggling, swap lines, cash transfers, exchange houses, ship registries, front companies" to be shut down immediately.

He called on allies to stand with the U.S. to "isolate and defeat the Iran threat" and noted that "Iran will never have a nuclear weapon".

According to CNBC, Trump has waged a pressure campaign on Iran since April under Operation Economic Fury, which targeted what it calls the regime's global terror financing and revenue streams.

Iran responds

Iran’s Foreign Minister Abbas Araghchi took to X on Aug. 20 to condemn the "Economic D-Day" and accused America of creating a diversion from its own crisis: "unprecedented debt & surging interest costs".

"Doubling down on failed policies will only bring further defeat—and enmity of Iranians. US economic terrorism threatens global economy and sovereignty worldwide."

CNBC reported that Araghchi had previously accused the U.S. of escalating sanctions after rounds of failed negotiations to force Iran into submission, and said the approach to the conflict was a barrier to any negotiated exit.

UAE suspends trade and financial dealings

This escalation comes a day after the United Arab Emirates (UAE) suspended all trade and financial dealings with Iran despite being one of Iran's most important commercial partners.

According to NBC News, on Aug. 19, the UAE accused Iran of firing two ballistic missiles towards it.

Both missiles splashed down in the Persian Gulf.

In a statement on X on Aug. 19, the Emirati Foreign Ministry said it decided to impose punitive measures but also said the country remained committed to "dialogue, cooperation and regional integration".

UAE's Director of the Strategic Communications Department at the Ministry of Foreign Affairs, Afra Al Hameli, said: "In light of regional escalations that undermine regional and international peace and security, all trade, commercial exchanges and financial transactions with Iran have been halted until further notice".

CNBC reported that Iran denied firing the missiles.

The UAE was Iran's largest source of imports, supplying more than 30 per cent of the country's total imports in 2024, according to the World Trade Organization.

Strait of Hormuz

According to Lloyd's List Intelligence, ships transiting through the Strait of Hormuz ran at levels well below pre-war numbers.

Preliminary data show 73 transits between Aug. 10 and 16, down from 91 the previous week.