Trump threatens Iran’s partners: How do secondary sanctions work?

EXPLAINERThe US has long used threats of secondary sanctions — in which countries that trade with a sanctioned country also face sanctions.Published On 26 Aug 2026The United States has announced a slew of new economic sanctions against Iran and threatened countries it trades with, aiming to choke Tehran’s economy as the months-long conflict remains deadlocked.At least 60 entities across the Middle East, Asia and Europe have been targeted in the latest sanctions as part of the economic pressure campaign that could further disrupt energy markets and rattle the global economy.The US-Israel war launched on February 28 has already resulted in a spike in oil prices and disruption in global supply chains due to the blockade of the Strait of Hormuz, through which a fifth of global oil and gas previously passed.In this explainer, we break down how secondary sanctions work, and when the US has used them in the past.What has the US threatened Iran’s trading partners with?The Trump administration has already been waging an economic pressure campaign against Iran under the banner of “Operation Economic Fury”, since the launch of the war in February.However, the US has recently decided to up the ante with “Operation Economic Outcast”, targeting countries that trade with Iran as well.US Treasury Secretary Scott Bessent said on Monday that the US would target all of Iran’s sources of revenue, including oil, to prevent other countries and companies from doing business with Tehran.“Around the globe, our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone,” he said.He said countries around the world must choose between the US and Iran, stressing that the new campaign exposes Tehran’s trade partners to secondary penalties.Bessent added that if countries and entities “facilitate transactions and are part of the ecosystem that turns Iranian oil into money, into repression, they will be targeted”, he said.Asked why the US is threatening Iran’s business partners instead of penalising them, Bessent said: “Well, we are giving everyone the opportunity to remedy bad behaviour. Why would I want to blow up the global financial system?”Bessent’s latest statements are a follow-up to US President Donald Trump’s Truth Social post on August 19, where the president announced what he called the “most crushing economic operation” against Iran.“ANY country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face TREMENDOUS Economic Consequences,” Trump wrote.What are secondary sanctions?The US has long used threats of what are known as secondary sanctions – in which countries that trade with a sanctioned country also face sanctions.For instance, secondary sanctions are in place against the purchase of Iranian oil or heavy military equipment from Russia: countries, companies and individuals that engage in this trade are at risk of US sanctions.How do they work?The US’s main leverage is access to its market and financial system.For instance, even if an Indian bank has no direct relationship with Iran, it could face secondary sanctions if it processes payments for an Indian firm trading with Tehran, especially if that bank has US branches, dollar‑clearing ties or American clients.That risk makes institutions hyper‑cautious, avoiding anything that even touches Iran for fear of being swept up in US penalties.The threat of secondary US sanctions is also why most global banks and financial institutions no longer participate in trade with Russia or Iran – they do not want to risk losing business in the US.How have secondary sanctions been used in the past?In 2017, Trump’s first administration authorised the Countering America’s Adversaries Through Sanctions Act (CAATSA), targeting Iran, Russia and North Korea.Under CAATSA, the US targeted specific countries with secondary sanctions. In 2018, it targeted the Equipment Development Department (EDD) of the Chinese military due to its purchases of Russian Su-35 fighter jets and S-400 missile systems.In 2020, Washington used the CAATSA sanctions to target NATO-member Turkiye’s Presidency of Defence Industries, the country’s military procurement agency, alongside some officials affiliated with it. This came a year after the US barred Turkiye from procuring US F-35 fighter jets.Turkiye was earmarked for its purchase of the Russian S-400 air defence system in 2019. Trump’s calculus was that the S-400s were incompatible with NATO equipment and a potentially threatened allied security.These sanctions made Turkiye cautious about making future purchases. In July 2026, Trump said he would lift sanctions on Turkiye and would soon decide on resuming sales of F-35s.Any move to return Turkiye to the F-35 programme would need to overcome a 2020 law requiring a presidential administration to determine that Ankara no longer possesses or operates the Russian systems.While the CAATSA sanctions were highly targeted, it is unclear whether any sanctions imposed on Iran’s trading partners would be.Who are Iran’s main trading partners?In 2024, Iran exported some $56bn worth of goods to at least 112 countries and territories, according to official customs figures. In the same year, Iran imported about $68.5bn worth of goods from at least 87 countries and territories.Its top export partners were China, Iraq, the United Arab Emirates, Turkiye and Afghanistan. Its top import partners were the UAE, China, Turkiye, the European Union and India.Washington’s leverage over Iran’s trading partners is contingent on the trading partners’ reliance on the American financial system. For several sectors in China and Russia, this reliance is minimal. Hence, analysts say that Trump’s leverage over China and Russia is limited.Those sectors include most of China’s oil refineries. According to analytics firm Kpler, China bought 80 percent of Iran’s shipped oil in 2025.Paul Musgrave, an associate professor of government at Georgetown University in Qatar, told Al Jazeera last week that “it is going to be very difficult” for Trump to pull off his pressure campaign effectively.Analysts say China could also hit back if the US sanctions its banks for processing Iranian funds, as the US Treasury has threatened.