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Trump announces 'economic warfare', warns consequences for countries supporting Iran
Calling it an 'Economic D-Day,' he urged allies to 'stand with the US to isolate, and defeat, the Iran threat'
- PUBLISHED: Thu 20 Aug 2026, 5:08 AM UPDATED: Thu 20 Aug 2026, 10:06 AM
[Editor's Note: For the latest updates on US-Iran hostilities since a 14-point MoU expired on August 17, follow the Khaleej Times live blog.]
US President Donald Trump has opened up a new front in the war with Iran, as he declared an economic operation, calling it the "most crushing" taken against any country.
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The operation would involve "economic warfare and isolation on an unprecedented scale", he said. The US President also announced repercussions for countries supporting Iran.
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"Any country which allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face tremendous economic consequences," he said in a Truth Social post.
Calling it an "Economic D-Day", he urged allies to "stand with the US to isolate, and defeat, the Iran threat". The US President said the "historic measures will cripple [Iran] and their ability to project terror worldwide".
Trump said that this came after Iran "failed to take" an opportunity to make a deal with the US. In keeping with his previous statements, the US President once again claimed that Iran was "hanging by a thread", that their navy, air force, military factories have been destroyed, and their currency is "worthless".
Is the US-Iran peace deal in effect?
The US-Iran Memorandum of Understanding, considered an interim peace deal, set a 60-day timeframe for a final deal to be set between the two warring nations. The MoU stated that this 60-day period was "extendable by mutual consent".
With the deadline reached on August 17, there was no sign of an extension. The following day, Trump said Iran is "not going to make the kind of deal that I feel is necessary."
Meanwhile, on August 17, a senior Iranian official told Reuters that Tehran had decided to shift its policy from defensive to "fully offensive" due to the deadlock in efforts to agree on a permanent end to its war with the US.
The official warned that Iran was prepared to escalate tensions in the Strait of Hormuz and across the wider region, saying Tehran would carry out a “timely and precise” military attack to break the US naval blockade if diplomacy failed.
Are US-Iran talks happening?
While Trump has positioned the US as the "victor" in the war with Iran, he has consistently maintained that negotiations were ongoing. Meanwhile, Tehran has often denied communication with the US.
However, on August 18, in a surprising turn of events, the US President said that talks between the United States and Iran were neither taking place nor scheduled. Read the Khaleej Times report for more context on Trump's statements on talks with Iran.
In the same post, he added that the US naval blockade remains in "full force", the Strait of Hormuz is open, and all water mines have been removed or detonated.
Poojaraj Maniyeri is a Digital Journalist who loves turning everyday conversations into news stories. She is also a typical bookworm, and brings a novel with her everywhere she goes.