President Donald Trump today rolled out a new round of economic sanctions targeting Iran's metals industry in an effort to punish the country for a missile attack earlier this week on two US military bases in Iraq.
The sanctions are both primary and secondary, meaning that they would apply to third parties doing business with Iran.
The latest round includes some of the previously sanctioned steel, copper and aluminum manufacturers in Iran and a Chinese trading company, Pamchel Trading Beijing, that the US said has bought tens of thousands of metric tons of steel slabs on a monthly basis since August 2019 from Iran's Mobarakeh Steel. Another Chinese company and a ship it operates are included in the sanctions.
In 2018, Iran produced 24.5mn t of steel, making it the 11th largest steel producer, according to Worldsteel, an international industry organization.
In total, the Department of the Treasury will sanction an additional 22 businesses and three vessels for operating in Iran's iron, steel, aluminum, or copper sectors.
An Omani company, Reputable Trading Source, is part of the new sanctions that will be enforced by the US Treasury. The sanctions also include a Seychelles-based entity, which the Treasury Department accused of being a front company for shipments to Iran.
"As a result of these actions we will cut off billions of dollars of support to the Iranian regime," said secretary of state Mike Pompeo.
The complex web of sanctions the US has imposed since 2018 already prohibits nearly all transactions with the Iranian economy for US and foreign companies, at the threat of financial and criminal penalties.
Trump also issued a new executive order giving the administration even broader authority to impose sanctions on foreign companies that continue to work in Iran. The multiple sanctions programs already have made most foreign banks wary of processing any transactions involving Iran, including imports of food and medicine that nominally are allowed under the US sanctions program. An EU-sponsored mechanism set up to bypass the dollar-based transactions with Iran, the Instex exchange, has not been able to function effectively.
"We have warned Instex and others they will most likely be subject to secondary sanctions depending on how they use that," US treasury secretary Steve Mnuchin said. But he added that the US is working with Switzerland to set up an exchange that will allow processing humanitarian transactions with Iran.
US sanctions cut Iran's oil exports, critical to the country's economy, by 2mn b/d, but have fallen short of the professed US objective of bringing that volume to zero. China continues to import crude from Iran, despite the threat of US sanctions.
"We are having conversations with China, as well as any other counterparty on sanctions evasion," Mnuchin said today. He downplayed continued imports of Iranian crude into China, noting that "the Chinese state companies are not buying oil from Iran."
The two-day lag for the Treasury Department to come up with new sanction targets after Trump on 8 January said the US will impose sanctions "immediately" suggests the US is already running out of Iranian entities to penalize.