Change of Direction: Trump Found Iran's Soft Underbelly
After months of military strikes, the US President returns to the "maximum pressure" policy and identifies Tehran's weak point: the economy. With 66% inflation and an 86% drop in oil exports, the Iranian regime is facing a deep crisis.
The US administration is changing direction regarding Iran. After months of military strikes, President Donald Trump is returning to the tool associated with his first term: maximum economic pressure, designed to force Tehran to open the Strait of Hormuz and agree to a solution on the nuclear issue. Donald Trump called it an "economic D-Day" — a pretentious name for an ambitious, but fundamentally very wise move.
The shift to economic pressure is also an admission of the limitations of military power to subdue Tehran. Iran has been hit hard, but the regime is still standing, and for now, there are no signs of increased public unrest. At the same time, the war is hurting Donald Trump's popularity and destabilizing the global energy market, months before the midterm elections.
Another logic is Donald Trump's basic instinct, which views economic warfare as a central tool for advancing his foreign policy goals, as evidenced by the tariff policy he has been pursuing since taking office.
And yet, despite appearances, this is the wisest step: the Iranian regime is more extreme than ever, but also weaker than ever. The regime in its current form will never surrender, and therefore the only way to deal with it is to act with all relevant tools in order to replace it — and first and foremost, the economic tool. Tehran can deal with an external threat; it is the internal threat that it truly fears.
Paradoxically, the regime is much more concerned about the deepening of American economic pressure than another military campaign. Evidence of this could be found in the unusual statement by the President of Iran that "capital and money are very sensitive to risk, and we must remove the risk from the country," with a heavy hint at the need to reach a political agreement now.
It is hard to argue with the numbers: annual inflation reached 66 percent in July, and food and beverage prices jumped by almost 130 percent. The economy is expected to shrink in 2026 by about 5.5 percent. According to the regime's own data, the minimum wage is enough for only eight days of living.
More than a million jobs were lost in the first three months of the war. And oil exports fell by about 86 percent from the pre-war period. In other words, Iran is suffering simultaneously from recession, extreme inflation, wage erosion, loss of employment, and a collapse in its most important source of income.
These are the grim starting conditions with which Iran enters the American economic pressure campaign, and they are incomparably worse than the starting conditions it faced — not with great success — during the first Donald Trump administration.
To add to the problems, the UAE decided to suspend trade and financial activity with Iran. This is a heavy blow: before the war, more than 30% of Iranian imports passed through it, and for years it served as a central hub for re-exports, money transfers, and bypassing sanctions for Iran.
This distress explains the palpable anxiety in Tehran and the regime's efforts to deter the US and its partners from tightening the pressure. Mohsen Rezaei, Secretary of the Supreme National Security Council, warned that Iran would respond with the "force of an earthquake" to countries that join the economic campaign.
At the same time, the Financial Times reported that Iranian forces had considered attacking American military assets in Bulgaria and Cyprus if Washington renewed the military campaign. On the domestic front, the regime is acting much more cautiously than usual:
The strict hijab law remains frozen, partly out of fear that its enforcement would reignite protests, and the authorities are currently settling for selective and indirect enforcement. The Iranian regime is showing toughness on the outside and (relative) softness on the inside, remembering that the real threat to its existence does not come from the US Fifth Fleet, but from the fifth district of Tehran.
It is difficult to predict whether the pressure will bring about change in the short term, and in any case, it is doubtful that there is anything that can change Iran's defiant stance. The regime is still capable of suppressing its citizens and harming its rivals, and further military strikes may be required.
And yet, Donald Trump has found Tehran's main point of weakness: the economy and its ability to provide its citizens with a dignified life. In doing so, the President is paving the most effective path to overthrowing the regime in the coming years, inspired by the famous campaign of Democrat Bill Clinton in 1992: "It's the economy, stupid."
