The Trump administration on Monday warned countries and companies doing business with Iran that they could face U.S. secondary sanctions, launching what Treasury Secretary Scott Bessent described as an “economic onslaught” against Tehran as the war approaches its six-month mark.

The Treasury Department stopped short of imposing the most severe penalties immediately, instead giving governments and businesses time to unwind their commercial ties with Iran. Bessent declined to identify which countries could be targeted or say when penalties would begin, while announcing sanctions on 60 individuals, companies and vessels.

The measures are part of a broader effort by President Donald Trump’s administration to choke off Iran’s access to the international financial system and further weaken an economy already battered by decades of U.S. and international sanctions.

“Why would I want to blow up the global financial system?” Bessent said at a news conference. “We believe that it is important to level set and give people a cure period, but they should know that that will move very quickly and that we are serious.”

The administration is also widening the range of activities that could trigger secondary sanctions to include digital assets, gold, technology, aviation and shipping, Bessent said.

He also signaled that the Treasury Department could announce sanctions against a major financial institution by the end of the week, although a Treasury spokesperson did not immediately provide further details.

China remains a key test

China is likely to be the most sensitive test of Washington’s new strategy.

Beijing has for years been Iran’s biggest buyer of oil, and the United States has intensified efforts to curb those purchases. Yet Washington has so far avoided sanctioning Chinese banks suspected of facilitating Iranian oil transactions.

Bessent said that no country or institution was beyond the reach of U.S. sanctions.

“We want to make clear here today that no one is above the reach of U.S. sanctions,” he said.

Asked specifically whether the Treasury was prepared to target a Chinese bank, Bessent said institutions involved in processing Iranian oil revenues would be vulnerable.

“If they facilitate transactions and are part of the ecosystem that turns Iranian oil into money, into repression, they will be targeted,” he said.

The new measures instead targeted businesses in China, the United Arab Emirates, Singapore and several other countries, including a cooking-oil refinery in France.

Washington’s decision not to immediately sanction Chinese financial institutions reflects the broader economic and diplomatic stakes. Trump and Chinese President Xi Jinping are expected to meet in Washington in late September, and sanctions on Chinese banks could complicate efforts to extend a deal reached last November covering Chinese rare-earth exports and U.S. tariffs.

Chinese Foreign Ministry officials said sanctions and pressure tactics were counterproductive and that Beijing would take whatever measures were necessary to protect its interests.

Bessent has previously called on China to cooperate with the U.S. campaign. The U.S. blockade of Iranian ports, renewed in mid-July, has already reduced Iranian oil flows to China.

Tehran threatens retaliation

Iran reacted defiantly to the expanded U.S. pressure.

Economy Minister Ali Madanizadeh said Tehran was prepared to withstand the new sanctions.

“We are fully prepared for the U.S. sanctions,” he said.

Speaking to state television, Madanizadeh added: “Naturally, the enemies intend to launch an economic terrorist attack on us, but we also have our own tools and know how to play the game. Our defense is no longer so defensive; the enemies should wait for an attack.”

He said China and Russia had not “accepted” the U.S. measures and predicted that other countries would resist Washington’s campaign.

Brig. Gen. Hossein Mohebbi, a spokesman for Iran’s Islamic Revolutionary Guard Corps, separately threatened heavy strikes against U.S. interests and energy chokepoints if Iranian infrastructure were attacked, according to Press TV.

Before the sanctions were announced, Tehran had threatened both military retaliation and further reductions in oil exports from the Gulf in response to additional U.S. economic measures.

Bessent singled out Bank Melli, one of Iran’s major financial institutions, which continues to operate branches in Europe, the Middle East and Asia.

“Every branch of Bank Melli must be shuttered and dark,” he said.

Decades of pressure

The United States has imposed sanctions on Iran for decades, targeting its oil revenues, weapons procurement and businesses controlled by the powerful Islamic Revolutionary Guard Corps.

The restrictions cut designated entities off from the dollar-based financial system, but Tehran has repeatedly found ways around them by creating new front companies, registering new vessels and developing alternative financial channels.

The Treasury Department has recently targeted independent Chinese “teapot” refineries for purchasing Iranian oil and expanded sanctions against the so-called shadow fleet of tankers used to transport it.

Since Trump returned to office for his second term in 2025, the United States has sanctioned more than 1,000 people, vessels and aircraft over Iran-related activities, according to Treasury data.

Recent measures have targeted Iran’s shadow oil fleet, shipping insurers, weapons-procurement networks and digital exchanges. U.S. authorities have also frozen an estimated $500 billion in Iran-linked cryptocurrency.

Yet decades of sanctions have failed to force Tehran to abandon its core policies.

The administration is now relying on economic pressure alongside a naval blockade that has inflicted further damage on Iran’s economy. Defense Secretary Pete Hegseth said earlier this month that the United States could maintain the blockade indefinitely, a prospect that could keep oil prices elevated and increase pressure on American consumers ahead of November’s congressional elections.

A long campaign with political costs

Daniel Fried, a former State Department sanctions coordinator who is now with the Atlantic Council, said Monday’s announcement had “did not live up to the hype,” but argued that economic pressure was preferable to renewed military confrontation.

The campaign will take time to have an effect, he said, and Washington may have to make concessions to secure the cooperation of countries whose economies are tied to Iran.

“You’re going to have to get the Gulf countries to agree, and you’re going to have to listen to what they want, and be steady,” Fried said.

The timing is particularly sensitive for Trump. The war has pushed energy prices higher worldwide, while his approval rating has fallen to 33%, according to the latest Reuters/Ipsos poll.

Trump has argued that the economic costs are necessary to ensure that Iran cannot develop a nuclear weapon.

Almost six months after the United States and Israel launched strikes on Iran, however, the conflict remains unresolved. Heavy fighting has subsided, but diplomatic efforts have stalled and shipping through the Strait of Hormuz remains severely restricted.

Only two commodity vessels crossed the strategic waterway on Monday, the lowest daily figure since early May, according to shipping data. Before the conflict, the strait carried roughly one-fifth of global crude oil and liquefied natural gas flows.

The war has killed thousands of people, most of them in Iran and Lebanon, and significantly degraded Iran’s conventional military capabilities. But Tehran retains enough missile and drone capacity to threaten Gulf states and shipping in the Strait of Hormuz.

The precise condition of Iran’s nuclear program, which Washington and Israel have sought to destroy, remains unclear.

Oil prices stabilized on Tuesday after falling by more than $2 a barrel the previous day.

Diplomacy shows limited progress

The administration’s expanding economic campaign comes despite efforts to find a diplomatic way out of the war.

The United States and Iran reached an interim agreement in June aimed at ending the conflict, but the so-called Islamabad memorandum quickly faltered.

There were, however, signs of movement in separate Pakistan-mediated discussions.

Pakistan said on Tuesday that its latest talks with Tehran had made “significant progress,” focusing on preventing further escalation, reopening the Strait of Hormuz and accelerating an end to the conflict.

Pakistan’s army chief, Gen. Asim Munir, traveled to Tehran accompanied by Interior Minister Mohsin Naqvi. Munir had spoken with Trump before the visit, according to Reuters.

“The Iranian president candidly shared his government’s perspective and we had a very constructive exchange on the issues involved,” Naqvi said in a post on X.

The two sides also discussed regional peace and possible avenues toward a negotiated settlement.

The White House and State Department did not immediately respond to requests for comment outside business hours, while Iran had not publicly commented on the latest Pakistan-mediated talks.

Trump last week warned countries against providing “any type of lifeline to Iran,” threatening economic consequences for those that continued to support Tehran. Iran, in turn, threatened to shut down oil exports from the Gulf.

Chinese oil trade remains the pressure point

The central question now is how far Washington is prepared to go against the international network that keeps Iran’s oil trade operating.

Bessent said the administration deliberately stopped short of immediately imposing the harshest penalties because it wanted governments and companies to have time to sever their ties with Tehran.

“Why would I want to blow up the global financial system?” he said.

But his warning was unmistakable: countries and financial institutions that continue to facilitate Iranian trade could eventually find themselves cut off from the U.S.-dominated financial system.

The decision to hold back from targeting Chinese banks may provide Washington with some room for diplomacy ahead of Trump’s expected meeting with Xi, but it also leaves the world’s largest buyer of Iranian oil at the center of the sanctions campaign.