US Treasury to broaden scope of secondary sanctions on Iran, source says

The US Treasury Department is expected on Monday to broaden the scope of secondary sanctions it can impose on entities and countries that maintain business ties with Iran as the Trump administration seeks to increase economic pressure on Tehran, a source familiar with the plans told Reuters. The action is aimed at giving a final warning to countries to sever their business ties with Iran in an effort to force an end to the nearly six-month conflict that has bottled up the Strait of Hormuz and Gulf energy exports, said the source, who spoke on condition of anonymity due to not being authorised to speak publicly about the matter. Treasury Secretary Scott Bessent is expected to announce more details of the Iran actions in a press conference at 1 p.m. EDT (1700 GMT). The source said Bessent also intended to provide a broader overview of an economic pressure campaign against Iran that he and President Donald Trump have described as an "economic D-Day", and would make it clear to countries that they must side with the US or risk having key companies and entities cut off from the dollar-based financial system. Read More: Trump criticises Canada over tariffs amid ongoing trade dispute Bessent last week billed the action against Iran as the "toughest sanctions in history", saying that along with the US naval blockade of Iranian ports, they would reduce the need for new "kinetic" military operations against Iran. Trump's war in Iran, which has pushed energy prices higher worldwide, is about to hit its six-month mark. While heavy fighting has subsided, diplomatic efforts to end the war have stalled and oil and raw material shipping through the Strait of Hormuz remains blocked, keeping energy prices elevated. Trump's approval rating has fallen to a low point, with just 33% of Americans in the latest Reuters/Ipsos poll approving of his performance. He says the economic costs are necessary to ensure Iran does not have a nuclear weapon. The US has maintained sanctions against Iran for decades, most of which have been aimed at curtailing the country's oil revenues, aviation sector, cryptocurrency, procurement of weapons components and other military hardware, and cutting off funding for business enterprises controlled by the Islamic Revolutionary Guard Corps, a dominant force in the Iranian economy. The sanctions bar designated entities from the dollar-based financial system, but Iran has been successful in quickly standing up new front companies, other entities and vessel registrations to evade the sanctions. The source familiar with Bessent's plans said the action is likely to reveal additional categories of Iran-related conduct that would be subject to secondary sanctions in the future, making it easier to take action against those facilitating the transactions on behalf of the Iranian government. The source did not specify the activities that could be subject to sanctions, but said that for certain Iranian sectors, any activity, even in a third country, could be subject to secondary sanctions. The Treasury currently approves licenses for transactions in a number of sectors in Iran, including for medicine and medical devices, cultural and arts exchanges and agricultural transactions. A senior administration official said Bessent is expected to warn that any remaining financial lifelines, including through banks and third countries that have tolerated certain activity, must be shut down. The official, who also spoke on condition of anonymity, said the Treasury has "mapped Iran's oil-smuggling and sanctions-evasion network" and will present this information to countries helping Iran evade the sanctions as a warning. Impact on relations with China The Treasury in recent months has sanctioned independent Chinese "teapot" refineries for purchases of Iranian oil and expanded its targeting of the shadow fleet of tankers transporting Iranian oil. A much more powerful tool is the authority to sanction banks in China and other countries that are facilitating transactions with Iran, a step that the Trump administration has so far been unwilling to take amid a delicate trade truce with Beijing. With Trump and Chinese President Xi Jinping scheduled to meet in Washington in late September, new sanctions on Chinese banks could sour prospects for extending a deal struck last November to keep Chinese rare earths flowing and cap US tariffs. The US blockade of Iran's ports has already curbed Chinese offers to purchase Iranian crude, Reuters reported on Friday, which may lessen the impact of secondary sanctions on China.