Defense Secretary Pete Hegseth declared Monday that the Trump administration's economic campaign against Iran is inflicting more damage than any military option, while Treasury Secretary Scott Bessent rolled out a sweeping new sanctions offensive called Operation Economic Outcast.
Hegseth, speaking to reporters in Oshkosh, Wisconsin, during the Pentagon's Arsenal of Freedom tour, said the administration's combination of a naval blockade and financial isolation has left Tehran's economy "in a spiral." Hours earlier, Bessent had previewed the new pressure campaign, warning countries around the world to sever financial ties with Iran or face being cut off from the U.S. dollar system.
The twin announcements represent the sharpest escalation yet in Washington's effort to force Iran to negotiate over its nuclear program, a goal President Trump has publicly demanded. After six months of hostilities that The Hill characterized as a stalemate, the administration is betting that choking Iran's revenue will succeed where bombs and missiles have not.
The Defense Secretary did not take the military option off the table. But he made clear that the economic track is delivering results right now.
Hegseth told reporters:
"If we need to use kinetic strikes, we'll use them. If Iran is foolish enough to overplay their hand or mess with the American military, we'll do what we need to do. But economic pressure hurts them the most right now."
He pointed to the U.S. naval blockade in the Arabian Sea as proof that Washington holds the strategic advantage in the region's most important waterway. The Strait of Hormuz, the narrow passage through which roughly a fifth of the world's oil supply flows, is now under effective American control, Hegseth said.
Hegseth framed the situation bluntly:
"Iran can't run anything through; we can. The world economy realizes that, and so they made a big bet on controlling it, and they can't."
Data from ship-tracking firm Kpler backs up the claim that traffic through the strait is dropping fast. On Sunday, only five vessels crossed the Strait of Hormuz, down from 25 on Saturday and 21 on Friday. That kind of collapse in commercial shipping does not happen by accident. It happens when the U.S. Navy parks itself in the chokepoint and starts turning ships around.
U.S. Central Command posted its own blockade statistics Monday. Since resuming the naval operation, American forces have redirected 71 commercial ships, disabled three, and boarded two. More than 40 vessels carrying humanitarian aid were allowed to pass, a distinction the Pentagon clearly wants on the record.
The administration has previously navigated diplomatic efforts involving Oman to reopen the strait, but Tehran's preconditions stalled those talks. Monday's moves suggest Washington has decided to press its advantage rather than wait for Iranian cooperation.
Treasury Secretary Bessent's Operation Economic Outcast goes well beyond the standard sanctions playbook. Just The News reported that the campaign targets more than 60 entities, individuals, and vessels worldwide that enable Iran's nuclear, missile, cyber, and oil revenue activities. The sanctions zero in on five sectors the Treasury has identified as Iran's economic lifelines: digital assets, technology, gold, aviation, and shipping.
Bessent described the approach as a "zero leakage" strategy, meaning the administration intends to seal every gap Iran has used to circumvent existing sanctions.
"We are enforcing a zero leakage approach. There will be no minimal breathing space for the regime to rebuild its capacity to inflict terror against America and the world."
The nearly 60 designated individuals, entities, and vessels span multiple countries, including China, the United Arab Emirates, Singapore, Turkey, and Greece, the Washington Examiner reported. China faces particular scrutiny. Beijing has purchased the vast majority of Iranian oil for years, using banks, front companies, and a shadow fleet to dodge American enforcement.
Bessent warned Beijing directly: "If they facilitate transactions and are part of the ecosystem that turns Iranian oil into money, into repression, they will be targeted."
The launch of Operation Economic Outcast marks the most aggressive use of Treasury's sanctions authority against Iran's enabler network in years. Bessent framed it as an endgame, not a first step.
"This is economic asphyxiation of this regime."
In a Financial Times op-ed, Bessent wrote: "The world should understand that our objective is to sever every economic lifeline that sustains the tyrannical regime until Tehran stands alone."
The sanctions campaign lands on an Iranian economy that is already in serious trouble. AP News reported that Iran's rial hit a record low of 2.02 million to the U.S. dollar. Rice prices have climbed 60 percent since the conflict began. Beef prices have surged more than 150 percent.
Those numbers translate into real hardship for ordinary Iranians, and they undercut the regime's ability to project strength. A government that cannot keep food prices stable will struggle to fund proxy armies and nuclear enrichment at the same time.
The rial's collapse to record lows has been accelerating in recent weeks, a trend that Monday's new designations will only worsen. The UAE has already suspended all trade and financial transactions with Iran following a reported Iranian missile attack on the Gulf country, removing another economic lifeline.
Hegseth tied the economic deterioration directly to the administration's strategic objective:
"Ultimately, their economy is in a spiral. They also know that we control the Strait of Hormuz, that our blockade is ironclad, and that oil is flowing through, ultimately."
The combined effect, naval blockade, financial sanctions, diplomatic isolation, and a cratering currency, is designed to leave Iran with what Hegseth called its "only choice": "to come to the table and actually talk about their nuclear program, which is what the president has demanded."
Iran's parliamentary speaker, Mohammad Bagher Qalibaf, responded on social media Monday, dismissing the American campaign as bluster.
"Americans know that no one buys their bombast; the United States is not in an economic position to further restrict its relations with other countries."
Qalibaf also claimed that Iran's trading partners have privately signaled they will ignore Washington's demands: "Iran's trading partners, both in the media and through messages sent to us, have made it clear that they don't take these statements into account anywhere."
The claims are worth measuring against the facts on the ground. The UAE, one of Iran's most important regional trading partners, has already cut off commerce. The rial is at a record low. Vessel traffic through the Strait of Hormuz dropped 80 percent in a single day. And the Treasury just designated nearly 60 entities across five countries for helping Tehran dodge sanctions.
If Iran's trading partners are truly unbothered, the evidence does not show it.
The administration's posture has evolved over recent months, with Hegseth at times stepping back from the public spotlight on Iran as Trump explored diplomatic channels. Monday's coordinated rollout, with the Pentagon chief and Treasury Secretary delivering complementary messages within hours of each other, signals that the economic track now has the full weight of the national security apparatus behind it.
For all the aggressive language, Bessent left a narrow opening. He said the sanctions would roll out in waves, giving some countries time to cut ties voluntarily before enforcement hits. When asked why secondary sanctions, penalties that would punish foreign banks and companies for doing business with Iran, were not imposed immediately, Bessent was candid.
"Well, we are giving everyone the opportunity to remedy bad behavior, why would I want to blow up the global financial system?"
But the grace period has limits.
"I would expect that very quickly, if they do not respond, then you will see the ramifications of their actions," Bessent said.
President Trump is personally reinforcing the message. Bessent said the president is making calls to world leaders, while officials at the Defense, Treasury, and State departments are contacting their foreign counterparts to demand action on severing ties with Iran.
The breadth of the effort, spanning over 60 entities across digital finance, shipping, aviation, gold, and technology, suggests the Treasury has spent months mapping Iran's sanctions-evasion networks before pulling the trigger. Bessent confirmed as much, saying the U.S. has mapped Iran's oil-smuggling and evasion infrastructure in detail.
Bessent framed the choice facing Tehran in stark terms:
"Iran now faces a very clear choice, with only two paths before them: complete global isolation and a subsistence economy, or a path back to normalcy with an opportunity to rejoin the global economy."
Regime officials like Qalibaf may dismiss the pressure as American bluster. But Tehran's own escalatory behavior in recent months suggests a government that feels cornered, not confident.
Economic pressure works best when the target has no good options left. By every available measure, a collapsing currency, cratering trade, a blockaded strait, and a sanctions net that keeps tightening, Iran is running out of moves. The only question is whether the regime figures that out before or after the next wave of designations lands.
