The ongoing conflict between the United States, Israel, and Iran, now two months old, shows no signs of swift resolution. While much commentary focuses on military and diplomatic limitations, the war has also laid bare the declining effectiveness of US economic sanctions.
The Limits of US Sanctions on Iran
Since the 1979 revolution, Washington has used sanctions to punish, contain, or isolate Iran. These measures—primary, secondary, and targeted—targeted Iran's alleged state sponsorship of terrorism and its nuclear program. The 2015 Joint Comprehensive Plan of Action (JCPOA) offered sanctions relief in exchange for nuclear limits, but the US withdrawal in 2018 under President Trump reimposed sanctions, leading Iran to restart enrichment in 2019.
Iran has since adapted by using shadow fleets, developing homemade drones, and strengthening ties with China and Russia. This reorientation has eroded US leverage. The current blockade of Iranian-linked ships appears to harden Iranian resolve, with Tehran even proposing tolls for commercial ships through the Strait of Hormuz.
Energy Market Blowback
The closure of the Strait of Hormuz has redirected economic coercion back at the US, particularly through energy markets. As a major oil exporter, the US faces higher gasoline prices, creating political costs for the Trump administration. Efforts to ease disruptions by relaxing oil sanctions on Russia and Iran have done little to offset rising fuel prices.
Historical Context
Economist Albert O. Hirschman noted that countries use trade disruptions to shift others' cost-benefit calculations. For decades, the US leveraged its global financial position, but its unilateral approach has eroded goodwill and multilateral cooperation. The inability to form a coalition against Iran reflects this decline.
While the US remains powerful, its sanction-first strategy has diminished its ability to shape other nations' behavior while imposing tangible costs on its own citizens.
