Trump threatens Iran with ‘economic warfare,’ while cutting off talks | CNN

US President Donald Trump has declared economic warfare against Iran, vowing to isolate the regime in a move he hopes will bring about what military force has so far failed to achieve: capitulation.

The United States is already targeting Iran’s oil sales, enforcing a blockade that is allowing much less Iranian oil to be exported to international buyers, including China. But sanctioning Chinese buyers or banks seems an unlikely move ahead of President Xi Jinping’s state visit to the United States in September.

Kpler, which tracks ship movements, estimates that Tehran may have enough oil already outside the blockade to provide it with about four months’ worth of export revenues, but said oil income could drop to zero beyond that if Tehran’s exports are strangled.

Iran’s economy has already taken a major hit from the war and is grappling with rampant inflation, but it could take many months to destroy the economy completely. Following decades of US sanctions, Iran has developed a “survival economy, which allows them to sustain more economic pain over time,” said Jorge Leon, head of geopolitical analysis at Rystad, a consultancy.

To really tighten the screws, Trump will need to tackle the clandestine trade and banking networks that enable Iran to evade sanctions and procure weapons. Doing so will require a crackdown on networks that operate most prominently through the United Arab Emirates, Hong Kong, and Singapore, according to the US Treasury.

In a significant blow to the Iranian regime, the UAE announced this week that it had suspended all trade and financial transactions with Iran. Still, restricting all illicit activity – including, Trump said, “oil smuggling, swap limes, cash transfers, exchange houses, ship registries (and) front companies” – will require considerable coordination across multiple countries and won’t happen overnight.

CNN’s Stephen Collinson contributed to this report.