Two months into the US- and Israel-led campaign against Iran, the conflict shows little sign of a quick resolution. Much analysis has focused on military and diplomatic constraints, but the war also highlights a political reality: US sanctions have lost much of their former bite.
For decades the United States has been the dominant economic and military power, centrally positioned in global finance and with a defence budget far larger than China’s. The US used that leverage—through primary, secondary and targeted sanctions—to advance foreign policy goals against states such as North Korea, Russia and Iran. But as global power has become more diffuse with the rise of China and a more multipolar world, Washington’s capacity to coerce via economic means has diminished.
US policy toward Iran since the 1979 revolution has aimed to punish, contain or isolate Tehran, often relying on sanctions related to terrorism sponsorship and nuclear activities. When Iran’s nuclear program drew UN penalties in the mid-2000s, the US and EU coordinated sanctions that sharply constrained Iran’s access to European banking and markets, inflicting serious economic pain.
The 2015 Joint Comprehensive Plan of Action (JCPOA) limited Iran’s nuclear program in return for sanction relief, providing a lifeline to an economy suffering high inflation and food-price shocks. But the US withdrawal from the deal in 2018 under the Trump administration and the reinstatement of sanctions revived many firms’ reluctance to engage with Iran. Iran then restarted enrichment in 2019, and efforts to return to the deal under the Biden administration failed to materialize.
Cut off from large parts of the global financial system, Iran adapted. It developed workarounds—shadow fleets for shipping, homegrown military production like inexpensive drones, and deeper trade ties with states outside the Western orbit. Tehran’s pivot toward China and Russia has weakened Western leverage over its economy. These adaptations mean US sanctions and current maritime blockades now appear to be hardening Iranian resolve rather than compelling concessions. Iran’s effective control of parts of the Strait of Hormuz and proposals to levy tolls on commercial shipping illustrate how it can reshape trade rules to its advantage.
The most tangible blowback for the US has been in energy markets. As one of the world’s largest crude and refined petroleum exporters, the US is exposed to oil-price volatility caused by policies that disrupt energy trade. Higher oil and gasoline prices at home mean direct economic pain for American consumers and political costs for the administration. Steps to relax oil sanctions on Russia and Iran to ease domestic prices have undercut the credibility of US sanctions policy and done little to offset fuel-price rises stemming from disruptions in the Gulf and risks to shipping through Hormuz.
Historically, US economic leadership depended not only on its own strengths but also on multilateral cooperation. The Trump administration’s failure to form a multinational coalition to respond to the crisis—reflecting frayed alliances—underscores the erosion of that multilateral capacity. As Washington leans more heavily on unilateral sanctions and coercion-first tactics, Russia has become bolder, China more assertive, and middle powers like Iran better able to resist US economic and military pressure.
This does not mean the US lacks significant global power. But a sanction-first, ask-questions-later approach appears to have weakened its ability to shape other states’ behavior while imposing growing costs on US strategy and on American citizens’ living standards.
Charmaine N. Willis is assistant professor of political science, Old Dominion University, and Keith A. Preble is teaching assistant professor, East Carolina University.
This article is republished from The Conversation under a Creative Commons license.
