Two months after the United States and Israel launched a military campaign against Iran, the conflict remains unresolved, with no clear end in sight. While much analysis has focused on the shortcomings of military strategy and diplomatic efforts, the protracted nature of the war has also highlighted another critical dimension: the diminishing effectiveness of U.S. economic sanctions.
A Conflict That Exposes More Than Military Limits
The ongoing war in Iran has demonstrated that even a superpower with overwhelming military superiority cannot easily achieve its objectives through force alone. But equally significant is the revelation that economic coercion—long a cornerstone of U.S. foreign policy—is losing its bite. As scholars of sanctions and statecraft, we argue that the Iran conflict underscores the declining returns of U.S. economic pressure in an increasingly multipolar world.
The Historical Context of US Economic Coercion
The United States has been the world’s dominant economic and military power for decades, particularly since the end of the Cold War. Its central role in global finance and a defense budget far surpassing that of any rival, including China, have allowed it to wield economic leverage as a primary tool of foreign policy. From North Korea under the Kim regime to Russia after its invasion of Ukraine, and Iran since the 1979 revolution, Washington has consistently used sanctions to punish, contain, or isolate adversaries.
Yet the rise of China and the emergence of a multipolar global order have gradually eroded U.S. hegemony. As a result, the country’s ability to unilaterally enforce economic coercion has weakened. The war against Iran has made this trend unmistakably clear.
Sanctions on Iran: A Decades-Long Strategy
From Primary to Secondary Sanctions
Since the breakdown of U.S.–Iran relations in 1979, Washington has imposed a mix of primary, secondary, and targeted financial sanctions to pressure Tehran. The stated reasons have included Iran’s alleged sponsorship of regional terrorism and its nuclear program, which emerged as a major concern in 2003 and led to United Nations sanctions.
Over time, U.S. and European Union interests converged, resulting in coordinated sanctions that restricted Iran’s access to the European banking system. As political scientist Adam Tarock noted, these combined efforts made the Iranian economy suffer—Tehran was “winning a little, losing a lot.” The sanctions contributed to crushing inflation and soaring food prices, creating deep economic pain.
The JCPOA Interlude
In 2015, the Joint Comprehensive Plan of Action (JCPOA) was negotiated between Iran, the U.S., EU members, Russia, and China. The deal placed strict limits on Iran’s nuclear program in exchange for relief from EU, UN, and U.S. economic sanctions. At the time, Iran’s economy was reeling, and the agreement promised a path out of decades of economic punishment.
The JCPOA brought temporary respite, but it was short-lived.
Trump's Maximum Pressure and Its Consequences
In 2018, the first Trump administration withdrew from the JCPOA and reimposed sanctions as part of a “maximum pressure” campaign. Even though other nations did not support this move, most global firms, fearing U.S. penalties, refrained from doing business with Iran. The reimposed sanctions—both primary and secondary—again squeezed the Iranian economy, but this time the impact was less severe than in earlier decades.
Why? Because the international landscape had shifted. China, Russia, and other actors provided alternative financial channels, trade routes, and diplomatic cover for Iran. The U.S. no longer commanded the same level of compliance from allies and rivals alike.
Diminishing Returns in a Multipolar World
The current conflict has shown that even an intense military and economic campaign fails to achieve decisive results. Iran has developed mechanisms to bypass sanctions, including barter trade, cryptocurrency, and closer ties with Eurasian powers. The U.S. can no longer isolate a country like Iran as effectively as it could two decades ago.
Moreover, the war’s protracted nature has drained U.S. resources and attention, while adversaries like China have strengthened their global influence. The lesson is clear: economic coercion is a weakening tool in Washington’s arsenal. Future policymakers will need to reconsider the reliance on sanctions as a primary means of statecraft.
Conclusion: A New Reality for US Statecraft
The Iran war has exposed the limits of both military might and economic pressure. In a world where power is increasingly distributed among multiple centers, the U.S. must adapt its foreign policy toolkit. Sanctions alone—no matter how sweeping—cannot substitute for strategic diplomacy, multilateral cooperation, and a realistic assessment of one’s own influence.
As the conflict drags on, the diminishing returns of economic coercion serve as a stark reminder: the era of uncontested U.S. dominance is over, and with it, the golden age of sanctions.