The US is expanding sanctions on Iran's financial networks. Iranian business owners worry about their economic future

The United States has broadened its sanctions on Iran, targeting the country's financial networks and key industries. Treasury Secretary Scott Bessent announced the expansion on August 24, stating that the U.S. would target five economic lifelines: digital assets, technology, gold, aviation and shipping, as well as entities facilitating illicit money transfers. Around 60 individuals, groups and vessels are initially affected, though major Chinese banks remain exempt.

Iran has long relied on alternative financial methods, such as exchange houses, gold, cryptocurrencies, front companies and smuggling ships to bypass sanctions. However, recent U.S. actions aim to make these methods more expensive for foreign intermediaries, exacerbating Iran's economic struggles. Oil exports have plummeted due to U.S. efforts to disrupt shipments, with Chinese imports dropping to 534,000 barrels per day in August from 823,000 in July.

Food prices have skyrocketed by 128% year-over-year, and many transactions now occur in U.S. dollars.

Businesses in Iran are facing severe inflation and mounting difficulties. A building materials store owner in Tehran remarked that holding goods can sometimes be more profitable than selling them due to rapidly rising prices. Another individual working in a trading company disclosed that over 70% of their staff had been laid off in the past six months, with importers of raw materials struggling to find partners willing to conduct business.

Iranian entrepreneurs, particularly those outside Iran, are also feeling the effects, citing increased difficulty in conducting transactions and potential tightening of residency rules.

Political economist Alireza Salavati cautioned that the new sanctions are likely to have psychological impacts rather than fundamentally alter Iran's economic strategy. The restrictions may intensify inflationary expectations and worsen existing polarization. The U.S. measures might also deepen Iran's reliance on informal financial channels, as closing one avenue could merely shift transactions to other methods.

While the sanctions could strain Iran's ability to trade and obtain foreign currency, their immediate impact will be felt by companies, workers and households already grappling with wartime disruptions and extreme inflation.