Why Trump Is Shifting to Economic Pressure on Iran

More than 23 weeks after war with Iran erupted, US President Donald Trump has signaled he wants to rely on tightening the screws on Tehran's economy rather than returning to a military campaign, as he had warned the week before.

Shipping through the Strait of Hormuz, a critical waterway now at the center of talks to end the war, remains disrupted by Iranian forces as the US Navy tightens its blockade of Iran's ports.

While Iran and Oman say they have come close to an agreement on managing the Strait of Hormuz, Trump says Washington is merely “negotiating” with Iran. Tehran denies any direct dialogue with Washington.

What has Trump said about a strategy shift?

“We are lowering the temperature,” Trump told Axios in an interview on Sunday about the US approach to the war with Iran. That marks a reversal from his comments the previous week, when he called Iran “two-faced” and gave them a “last chance” to reach a deal or face devastating attacks.

Now, Trump says he wants to hit Iran economically. He argues Iran is in a “very bad financial state,” citing high inflation and trouble paying soldiers, while praising the US naval blockade since April for adding to that pressure.

“We are just watching Iran with massive inflation and them having no money,” he said. He also argued that lower oil prices—trading at around $78 a barrel on Monday—have lessened the economic impact on US consumers after prices topped $100 a barrel due to the closure of the Strait of Hormuz.

Speaking about the war with Iran on Saturday, US Vice President JD Vance told Fox News: “We are in the middle of a game and we are applying a suite of tools—diplomatic, economic, military—to ensure the best outcome for the American people.”

What impact is the US naval blockade having on Iran?

The US has maintained a naval blockade of Iran's ports since mid-April. The goal is to cut Iran's oil exports—estimated at about 1.5 million barrels per day—and thereby significantly reduce the country's oil revenue.

On Saturday, US Central Command (CENTCOM) reported it had diverted 53 commercial vessels, boarded two, and disabled two others. Trump described it as an immovable “wall of steel.” The Iranian government confirms crude oil exports are nearly zero because of the blockade. The oil export restrictions are worsening Iran's existing economic problems, tied to domestic structural issues and mismanagement, compounded by years of heavy sanctions.

Iran's infrastructure has also suffered significant damage in the war launched by the US and Israel in late February. Tehran has demanded US compensation for these losses as one condition to reopen the Strait of Hormuz.

Is the US running low on ammunition?

Several US media reports suggest Washington is draining its ammunition stockpiles due to fighting in the Middle East and Ukraine. Late last month, Axios reported that the Chairman of the US Joint Chiefs of Staff, General Dan Caine, had warned Defense Secretary Pete Hegseth and Trump that a shortage of air-defense interceptor missiles could hamper America's ability to protect its forces and allies in the Middle East.

According to The Washington Post, the Pentagon has asked the US defense industry to rapidly ramp up production and delivery of weapons, including ammunition that is in critically short supply due to the war with Iran. However, a Pentagon official told Al Jazeera on Saturday that the US has enough ammunition to sustain military operations. “We have sufficient ammunition for the tasks at hand,” Jarred Conley, deputy director at the Defense Innovation Unit within the Department of Defense, told Al Jazeera in an exclusive interview.

Is Trump under domestic pressure over the war?

Trump began his second White House term early last year with a pledge to avoid “stupid wars.” Now, his war with Iran is unpopular in the US, where the president and fellow Republicans are seeking to protect a fragile congressional majority in the November midterm elections.

Only about 35% of Americans support the war, according to a recent Reuters/Ipsos poll. When asked which party has a better approach to handling the war and “terrorism,” registered voters favored Democrats over Republicans—37% to 36%. This is the first time Democrats have led since Reuters/Ipsos began asking the question in December 2024, when Republicans led 39% to 28%.

Will economic pressure work on Iran?

Mehran Kamrava, a professor at Georgetown University in Qatar, said talks between Iran and the US are progressing very slowly and doubted whether Washington's economic pressure campaign would succeed. He noted that Iran has been able to exert significant pressure on Gulf states hosting US military assets and infrastructure by striking them with missiles and drones.

“What we're seeing is the Iranians trying to put economic pressure on regional neighbors, especially countries like Qatar, the UAE, Saudi Arabia, and Kuwait, so that they in turn pressure the US to negotiate with Iran,” he said. “Meanwhile, the US is applying economic pressure on Iran... So neither side is willing to take the first step and extend a hand to say, 'Let's sit down and negotiate,'” he added.

Kamrava said he is skeptical that US economic pressure will work, especially when Iran's leaders are not under the same internal political pressure as the Trump administration. “Tehran is under enormous economic pressure, but we must remember that Iran's political system is essentially a very repressive regime. It's not the decision-makers directly who care about the circumstances of the middle class,” he said. “They want to hold on to power. So I'm not sure whether this tactic will work at this point.”

Has the US achieved any of its stated goals?

Essentially, no. The US and Israel have repeatedly shifted their goals since launching the war on February 28, the day they killed Iran's Supreme Leader Ali Khamenei. Initially, the US said the war was aimed at preventing Iran from developing nuclear weapons—something Tehran says it never intended—and forcing a change of government in Iran, which Trump has quietly abandoned. The US has also made other demands, including limiting Iran's ballistic missile program and ending support for Iran-linked armed groups in the region.

As the war drags on, the cost to Gulf states and the global energy crisis caused by the closure of the Strait of Hormuz have pressured Washington to reach a peace deal with Iran. Iran has set its own conditions to end the war, including lifting US sanctions and the naval blockade and releasing Iranian assets. However, the memorandum of understanding (MoU) Iran and the US signed on June 17 to reopen the Strait of Hormuz and begin a 60-day negotiation phase collapsed within days, mainly over disagreements on managing the strait.

Although the MoU mentioned lifting US sanctions on Iran and reconstruction funds for Iran, it did not specifically include US demands on Iran's ballistic missile program or regional armed groups. It also suggested the US had abandoned hopes of forcing regime change in Iran.