The Trump administration has rolled out new economic sanctions targeting Iran and third countries that continue to do business with it, opening a broad pressure campaign. It also floated an additional 7.5% tariff on Chinese goods over industrial overcapacity and warned Canada it would impose 50% duties on automobiles and steel. With his approval ratings sliding, President Donald Trump appears to be widening the economic front to shift attention abroad.
U.S. Treasury Secretary Scott Bessent said on the 24th that the department was launching "Operation Economic Outcast" to cut off every option available to the Iranian government, according to U.S. media reports. Iran faces a choice between a subsistence economy under complete international isolation and a return to normalcy that would let it rejoin the global economy, he said.
Under the plan, Washington will impose sanctions on third countries that deal with Iran in digital assets, technology, gold, aviation and shipping. It also designated more than 60 individuals, entities and vessels accused of helping Iran acquire nuclear and missile technology, conduct cyber operations and generate oil revenue. The list includes subsidiaries of Iran's Ministry of Defense and Armed Forces Logistics (MODAFL), malicious cyber groups directed by the Ministry of Intelligence and Security (MOIS), and Iranian crude oil brokers, companies and shadow-fleet networks based in the United Arab Emirates, Hong Kong, China, Singapore, Switzerland, Europe and elsewhere.
Ahead of a U.S.-China summit next month, the administration is also weighing an additional 7.5% tariff on Chinese products. The measure would be framed as a trade penalty on the grounds that China's excess production capacity harms U.S. companies. The exact rate has not been set and is expected to be finalized after further discussion.
The U.S. has been rebuilding its tariff barriers step by step since the Supreme Court struck down reciprocal tariffs as unconstitutional in February. In July, the Trump administration invoked Section 301 of the Trade Act to impose a 12.5% tariff, saying China had failed to adequately block products made with forced labor. Adding the 7.5% overcapacity tariff would raise the total rate on Chinese goods to 20%. The Associated Press said the step appeared aimed at working around the Supreme Court ruling. Still, rather than pursuing an all-out tariff war, Washington is seen as calculating that it can put overcapacity on the agenda at the September summit with China and seize the initiative in the talks.
The U.S. also kept up its trade offensive against Canada. Trump declared on Truth Social that tariffs on automobiles, light and heavy trucks, auto parts and steel would rise to 50% starting Jan. 1, 2027. The threat came after Canadian Prime Minister Mark Carney signaled retaliatory tariffs of a similar scale in response to the 50% U.S. duties on about $20 billion worth of Canadian goods. Trump said Canada was one of the most difficult countries in the world to deal with, on trade and in many other respects, and that it would no longer be treated as a privileged nation.
Most assessments, however, are skeptical that the sweeping economic pressure will produce concrete results. China, for its part, dismisses the overcapacity charge outright. Another constraint is that the U.S. investigation into Chinese overcapacity has yet to be completed, weakening the legal footing for the measure.
Many observers also expect the conflict with Canada to deal a considerable blow to the U.S. itself. Ford, General Motors and Stellantis, the three largest U.S. automakers, have poured enormous investment into integrated North American supply chains and would absorb the tariff impact directly. The Wall Street Journal noted that Canada exports about $50 billion in vehicles and auto parts to the U.S. each year, meaning a 50% tariff amounts to a $25 billion tax on American industry and consumers.
The effectiveness of the Iran sanctions is also uncertain. Without cooperation from China, the largest buyer of Iranian crude, the measures will struggle to gain enough traction. China opposes unilateral U.S. sanctions. Daniel Tannebaum, a senior fellow at the Atlantic Council, told The New York Times that the sanctions would amount to little more than an empty threat until action was taken against more significant countries doing business with Iran.
