US says sanctions will 'squash' Iran's economy and 'collapse' its regime

August 20, 2026

US Treasury Secretary Scott Bessent has announced plans for an unprecedented economic pressure campaign against Iran, demanding international allies choose sides in supporting Washington's effort to destabilize the Iranian regime. The initiative follows a ceasefire agreement between the US and Iran after military conflict that began in February 2026, though negotiations have stalled and the truce remains fragile. Iran's closure of the Strait of Hormuz during the conflict has already caused significant disruption to global oil and gas markets.

Who is affected

The Iranian government and regime
Iranian citizens experiencing inflation (60% average increase in basic necessities, 100% increase in food prices in 12 months to February 2026)
US allies and international trading partners facing pressure to choose sides
Foreign banks and firms conducting business with Tehran
Israel and Gulf Arab allies of the US (previously targeted by Iranian attacks)
Global oil and gas markets dependent on Strait of Hormuz transit (20% of world's oil and LNG)
US military bases across the Middle East

What action is being taken

The US is preparing to launch what Bessent calls "the greatest co-ordinated economic isolation in the history of the world"
The US Treasury and government are threatening full enforcement action against any international trading partners doing business with Iran
Iran is largely closing the Strait of Hormuz waterway
The ceasefire between the US and Iran is ongoing (though consistently broken)

Why it matters

This represents a significant escalation in US economic warfare strategy, with the Trump administration explicitly attempting regime change through economic means after military operations failed to achieve that goal. The success or failure of this approach will test whether comprehensive international sanctions can collapse an established government that has survived decades of economic pressure. The outcome will have major implications for global energy markets, regional stability in the Middle East, and the effectiveness of economic sanctions as a foreign policy tool versus military intervention.

What's next

A press conference is scheduled for August 24, 2026, where Bessent will reveal further details about the economic pressure plan
The US plans to implement what Trump describes as "the most crushing economic operation ever taken against any country"
According to the June Memorandum of Understanding, the US is scheduled to "terminate all types of sanctions" against Iran on an agreed-upon timeline (though this appears contradicted by current announcements)

Read full article from source: BBC