Overview
In the weeks since his return to the White House, President Trump has renewed his “maximum pressure” campaign against Iran. During his first term, President Trump took a hardline approach to Iran by withdrawing from the Obama-era Joint Comprehensive Plan of Action (i.e., the Iran nuclear deal) and reimposing stringent sanctions, including secondary sanctions, on virtually all aspects of the Iranian economy. Although the Iran sanctions program largely remained unchanged under President Biden, Republican officials were critical of the Biden administration for not utilizing the Iran sanctions authorities in a more robust manner. Early actions from the Trump administration suggest the administration is likely to take a more aggressive approach toward Iran with respect to implementation and enforcement of existing sanctions.
On February 4, 2025, President Trump issued National Security Presidential Memorandum 2 (NSPM-2) setting forth the renewed “maximum pressure” strategy. NSPM-2 cites the Iranian regime’s funding of terrorist proxies in the Middle East and the rapid improvement of its nuclear capabilities, among other activities, as grave threats to the safety and security of the United States. In order to address these threats, NSPM-2 directs administration officials to take a number of measures to increase pressure on Iran, including, among others:
- immediately imposing sanctions or “appropriate enforcement remedies” on all persons for which the Treasury Department has evidence of violating one or more Iran-related sanctions;
- implementing a robust and continual sanctions enforcement campaign that denies Iran and its proxies access to revenue;
- reviewing for modification or rescission any general license, FAQ, or other guidance that provides Iran or its proxies economic or financial relief;
- modifying or rescinding certain sanctions waivers; and
- implementing a robust and continual campaign to drive Iran’s oil exports to zero, including the export of Iranian crude oil to China.
Soon after President Trump issued NSPM-2, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated 15 persons based in China, India, Iran, and the United Arab Emirates (UAE) allegedly involved in an international network that facilitates the shipment of millions of barrels of Iranian crude oil to China. Likewise, on February 24, OFAC and the State Department designated over 30 persons and vessels for allegedly brokering the sale and transportation of Iranian petroleum-related products. These designations include oil brokers and shipping managers in China, India, Liberia, Malaysia, the UAE, and the Seychelles. Another round of designations on February 26 targeted an Iranian UAV procurement network.
Iran’s oil trade has long been a focus of US policymakers given its importance in reportedly funding the activities of Iran’s regional proxy groups. Although sanctions targeting Iran’s so-called “Shadow Fleet” and oil trading network are not new, the Trump administration appears poised to aggressively target Iran’s oil trade with China. This new focus may heighten the risk of secondary sanctions for financial institutions, oil brokers, and shipping companies in China and the Persian Gulf. So far, this risk has been reflected in OFAC’s designations—less than half of the persons designated on February 6 and February 24 are Iranian citizens or entities. Treasury Secretary Scott Bessent recently warned that “anyone who deals in Iranian oil exposes themselves to significant sanctions risk.”
We expect the Trump administration will be closely watching to see if the new sanctions designations impact Chinese oil purchases from Iran. The Trump administration is also advocating for a “snapback” of the pre-nuclear deal sanctions imposed by France, Germany, and the United Kingdom – which appears unlikely to happen. Congressional Republicans have also introduced legislation intended to bolster the Trump administration’s maximum pressure policy.
For more guidance on how the Trump administration’s renewed maximum pressure policy may impact your business, we encourage you contact a member of Steptoe’s Economic Sanctions team.
