The Trump administration is shifting its approach to the war with Iran from battlefield pressure to an all-out economic squeeze, officials signaled this week, after the 60-day window for a lasting US-Iran peace deal expired without an agreement.
Vice President JD Vance said the conflict has entered a "new phase" focused on economic pressure rather than further military escalation. "We're going to keep that going because we think that's the best way to ultimately accomplish the final objective here," Vance said, without detailing specific new measures.
"The Greatest Coordinated Economic Isolation In History"
Treasury Secretary Scott Bessent went further in comments to CNBC, describing the coming campaign as "the greatest coordinated economic isolation in the history of the world," though he said full details would not be released until Monday. When asked whether the US would also pressure China over its dealings with Iran, Bessent was noncommittal in public, saying "many conversations are best to have in private," while calling on Beijing to "get with the program."
China's foreign ministry pushed back on the framing, with spokesman Lin Jian telling reporters the country would continue to act in line with its own interests rather than external pressure.
A Deadline That Passed Without A Deal
The memorandum of understanding, signed in June at the G7 summit, had given the US and Iran 60 days to negotiate a permanent settlement covering sanctions relief, Iran's nuclear program and the future of the Strait of Hormuz. That window closed earlier this week with no extension announced and no agreement on the table, prompting Iran's Foreign Ministry to say Tehran would shift to a "fully offensive" military posture in response to what it called repeated US violations of the agreement's terms.
A Region Still Under Strain
The economic escalation comes against a backdrop of continued instability across the wider region. Yemen's Houthi movement claimed another attack on a Saudi-linked vessel in the Red Sea this week, a Russian oil tanker ran aground near Oman and began spilling crude onto local beaches, and the United Nations has warned of an "alarming" surge in violence as Israel intensifies operations in Lebanon.
For now, Washington's message is that further military escalation is being replaced, at least for the moment, by financial pressure aimed at squeezing Tehran's economy into returning to the negotiating table — though with full details of the plan still pending, how sharply that pressure will actually bite remains to be seen.