Donald Trump wants to make countries choose.
They can continue doing business with Iran, or they can preserve easy access to the United States and its financial system.
At least, that is the pressure strategy the U.S. president is now trying to build.
On August 19, 2026, Trump announced what he described as an unprecedented campaign of economic isolation against Iran after negotiations between Washington and Tehran failed to produce a broader settlement. He threatened serious economic consequences for countries, banks, businesses and other entities that continue providing Iran with financial or commercial support.
Treasury Secretary Scott Bessent followed on August 20 by warning that Washington could use secondary sanctions against foreign countries and companies that continue conducting certain business with Iran.
It sounds straightforward.
But can an American president really tell China, Turkey, Pakistan, India or Iraq that they are no longer allowed to trade with Iran?
Not exactly.
What Washington can do is make continuing that trade extraordinarily expensive.
Trump Cannot Simply Ban Another Country From Trading With Iran
The United States does not control another sovereign country’s trade policy.
If China decides that a Chinese company can purchase Iranian oil under Chinese law, the U.S. president cannot directly rewrite China’s domestic laws and prohibit that transaction merely because Washington objects to it.
The same principle applies to Turkey buying Iranian natural gas or Pakistan conducting cross-border commerce.
That is why Trump’s strategy depends heavily on something called secondary sanctions.
Ordinary, or primary, U.S. sanctions generally restrict American companies, banks and individuals from dealing with sanctioned Iranian entities.
Secondary sanctions work differently.
They target foreign businesses and financial institutions that may have no direct U.S. involvement but continue conducting specified transactions with Iran.
The Congressional Research Service describes secondary sanctions as measures designed to discourage third parties from dealing with the primary sanctions target. Penalties can include blocking assets, restricting transactions with American institutions and limiting access to U.S. financial instruments.
That creates a choice rather than a literal global prohibition.
A foreign bank may technically be able to continue handling Iranian transactions.
But what if doing so threatens its ability to conduct business in dollars or maintain relationships with American banks?
Suddenly, that Iranian transaction can become much less attractive.
The broader mechanics of U.S. Iran sanctions are explained by the Congressional Research Service’s overview of U.S. sanctions on Iran.
America’s Real Power Comes From the Size of Its Economy
Why do U.S. secondary sanctions matter so much outside American territory?
Because access to the United States is valuable.
The American market remains one of the largest in the world. The dollar is deeply embedded in international finance, and major multinational banks frequently require relationships with U.S. institutions.
A company therefore does not need to be American to worry about American sanctions.
Imagine a large international bank earning billions of dollars through global operations.
Iran may represent only a relatively small part of its business.
If continuing certain Iranian transactions puts access to the American financial system at risk, the commercial calculation can become obvious.
The bank may decide that Iran is simply not worth it.
That is how Washington can influence transactions occurring thousands of miles from U.S. territory without directly controlling the foreign government involved.
The U.S. Treasury already warns that foreign financial institutions can face sanctions for facilitating certain significant transactions involving sanctioned Iranian institutions and actors.
Trump is now threatening to apply that pressure much more aggressively.
Trump Has Already Created Another Weapon: Tariffs
Secondary sanctions are not the only tool available.
On February 6, 2026, Trump signed an executive order creating a process under which the United States can impose additional tariffs on products from countries that directly or indirectly acquire certain goods or services from Iran.
The order even covers Iranian goods purchased indirectly through intermediaries or third countries when their origin can reasonably be traced back to Iran.
The order does not automatically slap one identical tariff on every country trading with Iran. Commerce officials first determine whether qualifying trade is occurring, after which administration officials can determine whether additional duties should be applied and at what level.
The order gives a 25% additional tariff as an example of what could be imposed.
That changes the calculation for governments as well as individual companies.
A country may conclude that Iranian energy or other trade is economically important.
But if billions of dollars of its exports to the United States suddenly face additional tariffs, policymakers have to calculate whether maintaining those Iranian ties remains worthwhile.
The actual February measure can be read through the White House executive order on countries acquiring Iranian goods and services.
China Is the Biggest Problem for Trump’s Strategy
If Washington wants to financially isolate Iran, China is probably the hardest part of the puzzle.
Reuters reports that China is Iran’s largest oil customer. Kpler estimates that Chinese buyers imported an average of approximately 1.38 million barrels per day of Iranian oil during 2025, accounting for more than 80% of Iran’s shipped oil.
That trade has also adapted to years of American pressure.
According to Reuters, some Chinese independent refiners purchasing Iranian oil have relatively little exposure to the United States. Iranian crude can move through complicated chains of intermediaries, be labeled as originating elsewhere, travel through shadow-fleet networks and be settled in Chinese currency rather than dollars.
That matters enormously.
Secondary sanctions work best when the targeted business desperately needs access to the United States.
What happens when a small refinery was deliberately structured so that it has limited U.S. exposure in the first place?
Washington loses some leverage.
The Treasury can sanction the refinery, ships, middlemen and financial networks around it. It has already targeted Chinese-linked participants in Iranian oil transactions. But Iran and its customers can respond by creating additional intermediaries and more opaque payment channels.
It becomes an economic version of cat and mouse.
Sanctions Can Reduce Trade Without Eliminating It
There is already evidence that American pressure can dramatically change another country’s relationship with Iran.
India provides one of the clearest examples.
Its bilateral trade with Iran reached about $17 billion before falling sharply as sanctions pressure increased. Reuters reports that India-Iran trade stood at approximately $1.63 billion in fiscal 2025-26, with Indian exports such as cereals, tea, coffee and spices making up most of the remaining commerce.
That is a substantial reduction.
But it is not zero.
The same problem appears with Iran’s oil exports.
Sanctions increase shipping costs, complicate financing, make insurance more difficult and force traders into less transparent channels. Yet Iran has spent years developing methods designed specifically to survive those restrictions.
Before the current conflict, Iranian crude exports had at times climbed to around 1.7 million barrels per day despite existing U.S. sanctions, according to an analyst cited by Al Jazeera.
Sanctions can therefore make trade more difficult and expensive without necessarily making it disappear.
Turkey and Iraq Face Their Own Difficult Choices
Not every Iranian trading partner looks like China.
Turkey has strong economic reasons to maintain commerce with its neighbor.
Reuters estimates annual Turkey-Iran trade at approximately $5 billion to $6 billion, while Iran supplies around 13% of Turkey’s natural-gas imports.
Telling a country to stop buying Iranian gas is therefore not the same as asking it to abandon a minor luxury import.
Energy security is involved.
Iraq faces an even more sensitive problem.
Its trade with Iran exceeded $10 billion in 2025, and Iraqi energy officials estimate Baghdad pays approximately $4 billion to $5 billion annually for Iranian natural gas used in electricity generation.
If Washington aggressively restricts those transactions before alternatives are available, ordinary electricity supplies inside Iraq could be affected.
That illustrates one of the limitations of sanctions policy.
Economic pressure does not occur inside a laboratory.
The country being pressured has neighbors, energy customers, food suppliers, businesses and civilians whose economies may also be affected.
Pakistan Could Also Feel the Pressure
Pakistan is another country with significant exposure to whatever Washington does next.
Pakistan and Iran have discussed expanding bilateral trade toward $10 billion. Reuters reports that informal trade between the two countries has been estimated at roughly $4 billion, including oil, wheat, rice, livestock and medicines.
Geography makes the relationship particularly difficult to unwind.
Iran and Pakistan share a long border, and communities on both sides participate in formal and informal commerce.
American pressure could discourage banks and larger corporations from Iranian transactions much more easily than it can completely eliminate small-scale cross-border economic activity.
That same pattern has appeared repeatedly during earlier sanctions campaigns.
Formal banking channels disappear.
Alternative networks grow.
The UAE Shows How Quickly Iran Can Lose an Economic Lifeline
One of Iran’s most important regional trading partners has already moved in the direction Washington wants, although its decision followed its own security dispute with Tehran.
The United Arab Emirates suspended financial and economic transactions with Iran this week after accusing Iran of renewed missile threats, allegations Tehran denied.
The economic significance is substantial.
The UAE previously accounted for roughly 30% of Iran’s imports in 2024 and had long served as an important re-export and financial hub.
Losing that access while simultaneously facing tighter U.S. sanctions and pressure on oil exports could make Tehran’s economic position considerably more difficult.
But that still does not mean complete isolation is achievable.
As long as major countries remain willing to trade, alternative routes can survive.
Could Trump’s Strategy Create Problems for the United States Too?
Economic pressure is not free for the country applying it.
If Washington threatens tariffs against major trading partners, American importers and consumers can also face higher costs.
If Iranian oil exports fall sharply, global energy supplies can tighten.
If secondary sanctions provoke disputes with China, Turkey, India or other governments, sanctions policy can spill into broader diplomatic and trade relationships.
There is also a long-running debate over the extraterritorial nature of secondary sanctions.
Congressional Research Service analysis notes that foreign governments have historically challenged U.S. efforts to penalize companies for transactions occurring outside American territory, sometimes arguing that such measures interfere with their sovereignty.
Iran has made exactly that argument in response to Trump’s latest threats.
Foreign Minister Abbas Araghchi rejected Washington’s approach and argued that American economic pressure threatens the sovereignty of other countries. The Trump administration, meanwhile, argues that stronger economic isolation is necessary to restrict Iran’s resources and compel a change in Tehran’s behavior.
Those are fundamentally different interpretations of the same policy.
So Can Trump Actually Stop Countries From Trading With Iran?
Not completely.
Trump cannot simply issue an American order and legally prohibit every sovereign country from buying every Iranian product.
What he can do is force governments, banks and companies to calculate the price of continuing.
Does a bank value Iranian transactions more than access to the American financial system?
Does an exporter value Iranian commerce enough to risk higher tariffs on everything it sells into the United States?
Does a shipping company want one profitable Iranian contract if doing so could expose its vessels or finances to U.S. sanctions?
For many businesses, the answer may be no.
That is precisely why secondary sanctions have power.
But China demonstrates their limit. When companies deliberately reduce their dependence on dollars and American markets, use local currencies, deploy shadow shipping networks and route transactions through intermediaries, U.S. leverage becomes weaker.
The administration can raise the cost.
It can disrupt payments.
It can sanction banks, vessels, refiners and front companies.
It can threaten tariffs against entire countries.
What it cannot easily guarantee is zero trade.
That makes Trump’s latest strategy less like an economic switch that can turn Iran off from the world and more like an attempt to make every remaining commercial connection increasingly painful.
Whether that pressure ultimately changes Tehran’s decisions or simply pushes more of Iran’s trade into networks designed to operate beyond Washington’s reach is now the much bigger question.
