US says sanctions will ‘squash’ Iran’s economy and ‘collapse’ its regime

The Iranian economy has long been struggling under the weight of decades of international sanctions, which left it in tatters.

Earlier this year, Iran experienced weeks of protests due to the spiralling cost of living and inflation – with everyday Iranians blaming the regime for their difficulties.

Official figures show that in the 12 months to February 2026, the price of basic necessities increased by an average 60%, while food prices doubled in the same period.

At the time, Trump told demonstrators “help is on the way” as he urged them to “keep protesting”.

The attacks on Iran ensued – and later led to the US to imposed a blockade of Iranian ports, threatening further sanctions.

In April, the US launched a wave of sanctions on foreign banks and firms doing business with Tehran after it became apparent military operations had not led to the overthrow of Iran’s regime nor its surrender, as Trump had initially hoped.

Operation Economic Fury, announced by the US Treasury Department and the Pentagon, aimed at degrading Tehran’s warfighting capability by cutting off its revenue streams, and also included a naval blockade aimed at stopping Iranian exports.

The Memorandum of Understanding (MoU) signed by Iran and the US in June included a clause stating that the US would “terminate all types of sanctions” against Iran in an agreed-upon schedule.

Iran is no stranger to sanctions – a raft were first imposed shortly after the Islamic Revolution of 1979, during the US embassy hostage crisis.

Since then, more sanctions have been implemented, but the Iranian government has not collapsed – in fact it has succeeded in controlling dissent, most recently by cracking down on the protesters earlier this year.

One resident in the central Iranian province of Khuzestan told the BBC that a country with a long experience with sanctions will be able to overcome the additional economic pressure that the US is aiming to impose.

“There may be an impact at first, but that doesn’t necessarily mean Iran won’t be able to overcome the crisis,” he said.

Another resident also doubts fresh penalties will have an impact on the longevity of the regime.

“Not everything changes because of statements made by President Trump,” she told Middle East Lifeline.

“Iran has been living under sanctions for years, and people have become accustomed to this situation. I’m sure Iran will find other ways to continue trading.”

“Of course, there will be some impact and the economy may weaken, but that doesn’t mean it will collapse.”