Five ways Trump could target Iran’s economy from ‘teapots’ to land blockade

U.S. President Donald Trump pledged on Friday to inflict severe economic damage on Iran following Treasury Secretary Scott Bessent’s announcement that Washington plans to levy unprecedented restrictions on Tehran as early as next week.

Trade embargoes, asset freezes, and sanctions have been imposed by the United States, European Union, and United Nations since the late 1970s, citing Tehran’s nuclear ambitions, human rights abuses, and backing of militant factions.

Following the outbreak of the Iran war in February, Washington introduced a naval blockade alongside further financial, energy, and maritime penalties.

Figures from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) reveal that over 1,000 individuals, ships, and planes have faced sanctions since Trump assumed his second term.

Latest actions have focused on Iran’s covert oil tankers, maritime insurers, digital platforms—blocking roughly $500 billion in cryptocurrency tied to Iran—and individuals or organizations facilitating weapons procurement.

Analysts note the Trump administration could consider the following avenues:

SANCTIONS ON CHINESE ‘TEAPOT’ REFINERS

Chinese independent refineries known as “teapots” account for a quarter of Chinese refinery capacity. They operate with narrow and sometimes negative profit margins.

China buys more than 80% of Iran’s shipped oil, according to 2025 data from analytics firm Kpler. Independent refiners absorb much of this trade, exposing them to so-called secondary measures that penalize entities helping a primary sanctions target.

Past U.S. sanctions have deterred larger independent refiners from buying Iranian oil. But the independent refineries are somewhat immune since they have little exposure to the U.S. financial system, sanctions experts say.

SANCTIONS ON CHINESE BANKS

OFAC has imposed secondary sanctions on smaller China- and Hong Kong-based entities accused of processing billions of dollars in Iranian oil and helping to fund weapons procurement.

Treasury has warned two larger Chinese banks they could face secondary sanctions if Iranian funds were found moving through their systems, but has stopped short of designating them.

Hitting those two banks, which U.S. officials have not publicly identified, or imposing other sanctions could have a chilling effect on bigger financial institutions, sanctions experts said, although they warned it could also trigger retaliatory actions by Beijing.

Trump administration officials have sought to play down tensions between Washington and Beijing ahead of an expected meeting between Trump and President Xi Jinping later this year. They worry that China could curtail exports of critical minerals that are essential to advanced technology production at a time when the U.S. and Western allies are still trying to develop their own supplies.

‘WHACK-A-MOLE’

The United States could continue targeting Iranian individuals and entities, as well as others in China and the Gulf, that are helping Tehran evade sanctions to collect revenues for its war effort.

Treasury recently issued sanctions against firms that are springing up to facilitate Iran’s trading of oil revenue for imports. But such measures amount to a “whack-a-mole” approach that has not altered Iran’s behavior, said Brett Erickson, managing principal of Obsidian Risk Advisors, noting that Tehran simply creates new entities to replace them.

Miad Maleki, a sanctions expert with the Foundation for Defense of Democracies, said Bessent was likely signaling a sharpened enforcement push against oil shippers, purchasers and currency exchangers who help Iran pay for its imports.

Further aviation sanctions were also possible, aimed at degrading Iran’s ability to move trade now that the U.S. has blockaded shipping via the Strait of Hormuz, he added.

LAND BLOCKADE

Some U.S. and Israeli officials have floated the prospect of a land blockade, which would require assistance from Iran’s neighbors: Iraq, Turkey, Pakistan, Afghanistan, Turkmenistan, Azerbaijan and Armenia.

The Trump administration has varying degrees of closeness with all those countries except Afghanistan, but that border is mountainous and extremely difficult to patrol anyway.

Trump may have leverage over Pakistan, which recently sought a $10 billion currency swap line from Treasury, and Turkey, which is seeking to rejoin the U.S. F-35 warplane program.

A land blockade could increase pressure on the Iranian people by halting their imports of food, energy and textiles, but experts say such a move would be difficult to execute and might not result in protests or internal pressure.

SECONDARY TARIFFS

Trump has repeatedly threatened tariffs on goods from countries that do business with Iran, although the Supreme Court struck down the legal basis for such taxes.

The Senate passed a sweeping Russia sanctions bill last week that included new Iran sanctions and would give Trump new tariff powers that he could potentially use against countries that aid Iran’s commerce and weapons procurement.

That legislation must still pass the U.S. House of Representatives, which could prove challenging given widespread concerns among Democrats and some Republicans about the tariff measures.