President Donald Trump has announced what he called the most crushing economic operation ever taken against any country, directed at Iran. Iranian foreign minister Abbas Araghchi responded publicly, arguing that doubling down on failed policies will bring further defeat and describing the measures as economic terrorism threatening the global economy.

The instruments behind the phrase

“Economic warfare” is a description rather than a defined thing, and announcements of this kind rarely specify which levers are being pulled. The available ones are finite and worth knowing, because each has a different mechanism and a different limit.

• Asset freezes and designations. Blocking named individuals, companies, banks and vessels from the financial system.
• Secondary sanctions. Penalising third-country firms that trade with the target. This is what converts a national measure into a global one, and it is the most powerful instrument in the set.
• Financial messaging restrictions. Cutting institutions out of the systems banks use to communicate, which makes ordinary transactions slow and expensive rather than impossible.
• Shipping and insurance measures. Targeting the vessels, owners and insurers that move cargo — the mechanism behind the shadow fleet economy we described in our explainer.
• Trade tariffs and import bans. Blunt, visible, and generally the least significant against a country already largely excluded from the market imposing them.

Why secondary sanctions are the ones that matter

A country that has already sanctioned a target directly has little left to withhold. What it still controls is access to its own financial system by everyone else.

Secondary sanctions work by forcing a choice on a bank in a third country: trade with the target, or keep access to dollar clearing. For almost any commercial institution that is not a difficult decision, which is why measures of this kind have effects far beyond the countries that impose them. It is also why other governments object to them as extraterritorial — a complaint made by allies as often as adversaries.

What the evidence says about whether it works

This is genuinely contested among people who study it, and the disagreement is not partisan.

The case for: sanctions demonstrably shrink economies, restrict access to technology and equipment, and raise the cost of sustaining a military campaign. They are also, importantly, an option between doing nothing and using force — which is why governments reach for them.

The case against: the literature on whether economic pressure changes a government’s behaviour is decidedly mixed, with many scholars finding that comprehensive sanctions rarely produce the political concession sought. Costs fall disproportionately on ordinary people rather than on leadership. And prolonged pressure builds adaptation — alternative payment channels, substitute suppliers, smuggling networks — which is difficult to reverse afterwards.

Both sides can point to real cases. Neither can point to a settled finding.

The specific complication here

Iran has been under extensive sanctions for many years, which limits the marginal effect of new ones. And the announcement lands in a situation where the Strait of Hormuz is already largely unusable, meaning normal commerce is disrupted by the conflict itself rather than by any legal measure.

There is a further wrinkle worth noting. Measures that restrict a country’s oil exports tighten global supply and raise prices — which can partly compensate the target for lower volumes, and raises fuel costs for the countries imposing them. Economic pressure in energy markets is rarely one-directional.

What to watch instead of the adjective

Announcements are not measures. The things that indicate what has actually changed are the published designations naming specific entities, whether secondary sanctions are extended to new sectors, whether third-country banks visibly withdraw, and whether any waiver or carve-out is issued for humanitarian trade in food and medicine.

Until those appear, “the most crushing economic operation” describes an intention, and there is no way to assess it against a policy that has not yet been specified.

Sources

• The Times of Israel — Trump’s announcement and Araghchi’s response, 20 August 2026