The United States has unveiled a sweeping expansion of secondary sanctions aimed at severing Iran's remaining ties to the global economy. The message to companies worldwide is blunt: keep trading with Tehran and risk losing access to the dollar-based financial system.
At a US Treasury press conference on Monday, Secretary Scott Bessent described the initiative as an "economic onslaught" against Iran's financial connections. He also hinted at imminent action, saying he expects "an announcement of a major financial institution being sanctioned by the end of this week." The plan, dubbed Operation Economic Outcast, follows his Sunday warning of an "economic D-Day" for Tehran.
The Treasury designated nearly 60 companies, individuals, and vessels across several jurisdictions, including Chinese nationals, and suspended licences that had permitted limited dealings with Iran. More significantly for foreign businesses, the scope of secondary sanctions has widened to cover shipping, aviation, gold, technology, and digital assets, in addition to the existing focus on oil.
Bessent warned that any entity laundering money on Iran's behalf would be removed from the dollar system. When asked whether the measures would extend to China, he replied that "no one is above" them. He declined to set a compliance deadline but said Washington does not have infinite patience, while President Donald Trump has been telephoning world leaders to urge them to halt trade with Iran.
Notably, the Treasury stopped short of penalising any third country outright, holding the toughest blow in reserve during what it called a "cure period." Iran has vowed to retaliate and expects major trading partners to resist Washington's pressure.
Europe's direct exposure is modest
For European companies, the direct trade with Iran is already minimal. According to Eurostat, EU goods trade with Iran totalled just €3.72 billion in 2025, with €2.97 billion in European exports—roughly 0.1% of the bloc's total exports, down from a peak above €27 billion in 2011.
What remains is concentrated: Germany accounts for about 32% of EU-Iran trade, Italy 16%, and the Netherlands 15%. European exports are mostly pharmaceuticals, machinery, and medical equipment—categories often covered by humanitarian exemptions—while imports are dominated by pistachios and other food products.
Given this limited exposure, European markets took the news calmly on Tuesday morning. The Euro Stoxx 50 and the broader Stoxx 600 both traded around 0.2% higher. The UK's FTSE 100, Germany's DAX 30, France's CAC 40, Italy's FTSE MIB, the Netherlands' AEX, and Switzerland's CH20 were all up between 0.1% and 0.3%, with the German index leading.
The real risk lies in the 'plumbing'
The greater danger for Europe is not Iranian trade itself but the reach of US enforcement. Banks, insurers, shipping companies, and commodity traders handle transactions for clients across dozens of countries. Exposure to a sanctioned counterparty elsewhere—rather than business directly in Tehran—is what tends to trigger penalties.
The precedent is unforgettable in European boardrooms. In 2014, BNP Paribas paid a record $8.9 billion (€7.6bn) and pleaded guilty to criminal charges for processing transactions involving Iran, Sudan, and Cuba. The French bank also lost the right to clear dollars through its New York office for a year.
European firms also face a legal bind. The EU's Blocking Statute bars companies from complying with US sanctions on Iran unless the European Commission authorises it. The European Court of Justice has ruled that firms terminating Iranian contracts must justify their decision on grounds other than American pressure.
This leaves European businesses in a precarious position: they must navigate between Washington's demands and Brussels' regulations, all while avoiding the kind of penalties that have reshaped the compliance landscape. As the US tightens its grip, the pressure on European financial institutions is likely to intensify, even if the direct trade numbers remain small.
