Approaching a breaking point? The US economic war against Iran is escalating

The Donald Trump administration has chosen economic warfare as the most effective path against Iran, with the stated goal of bringing it to its knees until it agrees to American conditions for ending the war. The overarching strategic goal is to bring the regime to critical weakness, which may also lead to its overthrow, by depleting its resources and creating internal economic chaos that will cause civil unrest.

In less than three months, the US will hold midterm congressional elections, after which the president will be much freer to take further steps against Iran, including the resumption of strikes. This timing aligns with analyses by intelligence and economic agencies, according to which the impact of the naval blockade and economic war will intensify to a critical point towards the end of the calendar year.

Already, official inflation is reaching 80%, and it is much higher for basic commodities. Wages and pensions in the public sector have been cut, and the unemployment rate has risen, by estimates, to 30%.

Economic isolation is escalating

This economic war is entering a new phase, in which, alongside tightening the naval blockade to the maximum level and expanding sanctions on the export of oil and its products and on the companies involved in this, measures will also be expanded to trade areas and additional finance and money sectors. We recall that Treasury Secretary Scott Bessent announced an intention to intensify economic measures against Iran, adding that the steps to be taken will be such that have never been seen before.

President Donald Trump emphasized the words of Treasury Secretary Scott Bessent and said that it would be "unprecedented economic isolation" for Iran. Among the measures to be taken is long-term planning by the US Navy for full control over the Strait of Hormuz, in order to tighten the blockade.

Dramatic American sanctions are also expected against companies and countries engaged in trade with Iran, not only in the field of oil and military equipment but in a long line of products and sectors, except for those considered humanitarian such as food and medicine. The meaning is a danger of imposing broad sanctions on many companies in Pakistan, China, Turkey, Russia, and more, due to trade with Iran.

Focus: The money of the IRGC

At the same time, the US Treasury Department is greatly expanding activity to confiscate and block Iran's financial assets, both those held in banks and other financial institutions and those held in the crypto space. According to estimates and intelligence information, Iran's IRGC has transferred a significant portion of its assets to cryptocurrencies, so that it would be possible to manage the continuation of international trade and prevent tracking and freezing.

The department in the US Treasury dealing with this has monitored many such accounts, managed to get its hands on some of them, and is also acting against the others. The focus is the huge economic corporation of the IRGC, "Khatam al-Anbiya," which controls almost half of Iran's economy. Hitting it directly affects the regime's ability to endure.

In the US and Israel, they identify the growing difficulty within Iran to overcome the shortage of income and products, and the indications of this from within Iran are increasing. One of them is particularly interesting: a statement by Davood Rangi, Deputy Chairman of the Chamber of Commerce in Iran, according to which:

"We do not have the capacity to cope with a severe naval blockade for more than three months."

"We will not be able to cope for more than three months"

In a conversation with an Iranian journalist, he said that the country would not have enough stocks of essential goods for more than three months, and that Iran is especially dependent on the import of food products, including wheat and corn. In an attempt to overcome the naval blockade preventing the entry of these essential goods, Iran is expanding land traffic through Pakistan and Turkey, but it is not enough.

According to the data presented by Rangi, replacing one ship carrying essential goods to Iran would require about 2,500 trucks, and the import by sea is in the volume of at least 400 cargo ships. Therefore, land routes cannot compensate for the US naval blockade. He called on the country's leadership to return to negotiations.

Iran stopped publishing trade statistics since the beginning of the war. From statements by economic officials, it appears that there has been a sharp decline in volume of at least 30% since the beginning of the year, but unofficial data and data from the countries it trades with show a much more severe picture.

Trade with the world is plummeting

China is Iran's largest trading partner, and it is responsible for about a third of the country's foreign trade that is not related to oil. Until before the war, it purchased about 90% of its crude oil from Iran.

Chinese data estimate bilateral trade not related to oil at less than 823 million dollars during the first four months of the war, from March to June. This is a quarter of the level recorded in the same period last year — meaning a 75% drop in trade volume.

Trade with some of Iran's other main partners has also shrunk sharply. The UAE, Iran's second-largest trading partner, has almost completely stopped trade with Tehran, which attacked it many times during the war.

Official data from Turkey, the fourth largest in trade with Iran, show that Turkish exports to Iran dropped by almost half between March and June, to about 716 million dollars, while imports from Iran dropped by 37% to 907 million dollars.

India recorded a similar decline. Its exports to Iran dropped by about 60% during the first four months of the war, to about 150 million dollars. India, the largest supplier of raw materials for medicines and medical equipment, completely stopped this export due to the closing of the Strait of Hormuz.

Fuel shortages and the slope to chaos

Fuel shortages are worsening every day, as Iran, despite being one of the world's largest oil producers, does not have enough refineries, and the stock of refined fuel for transport and power stations is running out. Private car owners receive an allocation of only 60 liters per month, and for every additional liter, the price is multiplied several times.

From this area, the beginning of chaos may come, such as a strike by truck drivers together with workers in essential industry factories whose wages have been cut — and the slope is slippery.