The United States announced on Monday that it would sanction countries which refuse to sever their economic relationships with Iran, setting deadlines for them to wind down activities that Washington has identified. It stopped short of imposing the largest penalties it had been threatening.
Treasury Secretary Scott Bessent, who had described the coming measures as an economic D-Day, told a news conference at the Treasury Department that every country concerned had been given a defined timeline to shut down the activities in question, and that if they did not act, the United States would act unilaterally under Treasury authorities. He declined to name the countries.
Analysts speaking to CNN identified China, India, Turkey, Iraq and the United Arab Emirates as the most exposed, with China by far the most consequential. India’s trade with Iran has fallen in recent years to around $1.6 billion in 2025-26, according to India’s Department of Commerce.
What a secondary sanction actually is
Ordinary sanctions tell American people and companies what they may not do. Secondary sanctions tell everyone else what will happen to them if they do it: lose access to the US financial system, to US markets, or to dollar clearing.
Because most international trade is invoiced and settled in dollars at some point in the chain, that threat has unusual reach. A refinery in Asia buying Iranian crude is not breaking any law in its own country. It is being told that continuing to do so may cost it the ability to bank normally anywhere in the world. The mechanism is the same one that gives the terrorism designation lists their weight far outside American jurisdiction.
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Why the announcement was smaller than the language
Monday’s step was a threat with a timetable attached rather than an immediate penalty. There are several standard explanations for that kind of choice, and it is worth naming them as possibilities rather than conclusions.
One is negotiating room. Talks between Iran and Oman over the future management of the Strait of Hormuz were due to continue on Tuesday. Announcing penalties before those talks conclude would remove something to trade away.
A second is the cost to the countries being pressured, several of which are partners Washington needs for other reasons. Sanctioning Indian refiners or Emirati banks carries diplomatic consequences that sanctioning Iranian entities does not.
A third is price. Measures that genuinely remove Iranian barrels from the market push up the cost of oil everywhere, including at American pumps, in a year with midterm elections in November. Energy analysts have made this argument repeatedly through the six months of the conflict.
None of these is confirmed by the administration, which has framed the approach as a deliberate escalation ladder. President Trump said on Monday that Iran was collapsing.
What Iran can do about it
Countries under this kind of pressure have a well-worn set of responses, and Iran has used most of them before: selling oil at a discount through intermediaries, moving cargo on ships that switch off their transponders or change registration, settling trade in currencies other than the dollar, and routing payments through smaller banks with no US exposure to lose.
Each of these works, and each is expensive. Discounts, longer routes, insurance workarounds and intermediary fees all take money out of the exporting state’s revenue even when the volumes hold up. That is the theory of the pressure campaign: not to stop the trade outright, which is very hard, but to make it progressively less profitable.
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The argument about whether it works
There is a long-running disagreement among economists and sanctions scholars about campaigns of this kind, and it has not been settled by the last six months.
Supporters argue that sustained financial pressure has measurably constrained Iranian government revenue, that it is the only coercive tool short of further military action, and that alternatives such as negotiation have repeatedly failed. Critics argue that the historical record on sanctions changing the behaviour of determined governments is poor, that the costs fall disproportionately on ordinary people through inflation and shortages of imported goods including medicines, and that pressure tends to strengthen rather than weaken the position of hardliners inside the targeted state.
Both sides can point to cases. Neither can point to a controlled comparison, because there is no version of the same country in the same year without the sanctions.
What happens next
The immediate test is whether any of the unnamed countries publicly complies. Bessent said he expected others to follow the United Arab Emirates in halting trade ties with Tehran. Israeli Prime Minister Benjamin Netanyahu welcomed the announcement.
The second test is the Hormuz talks. If they produce an arrangement, the deadlines announced on Monday may quietly lapse. If they collapse, the penalties held back this week become the next available step.
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