Second, the new sanctions appear to confirm widely held Iranian beliefs that the United States is out of effective economic measures and is scraping for new tools. With Iranian oil sales down to 300,000 barrels per day (from 2.5 million before sanctions were reapplied) and Iran’s economy suffering, the United States has effectively cut Iran out of international commerce already. Washington might have a few effective moves left, but a continued maximum-pressure economic campaign will now be more about sustaining than increasing costs to Iran, largely by making sure companies and countries grudgingly abiding by U.S. restrictions continue to do so. The real signal Iran will take from the new sanctions is that the Trump administration either does not understand this reality or cannot come up with a more effective option to improve upon it.
As is often the case with this administration, the rollout was confused, with the president and Treasury Secretary Steven Mnuchin claiming variously that the designations were a response to Iran downing a U.S. drone or targeting commercial shipping last week, or were already expected before those provocations, or both. But it is hard to see the sanctions as anything but a tit-for-tat reaction, and that is how Iran will interpret them. That means that, if the United States wants to respond to future Iranian moves, whether increases in Iran’s nuclear program or proxy attacks in the region, Trump will be increasingly limited to military responses. The effect of this is to ratchet up tensions with no strategic outcome in mind, pointing us toward a confrontation simply for lack of a better idea.