New Sanctions Target Additional Sectors Of Iranian Economy

In Short

The Situation: The Trump administration announced a new round of sanctions on January 10, 2020, following escalating tensions between the United States and Iran.

The Result: The new sanctions complement existing sanctions that already target a wide swath of the Iranian economy, including the automotive, energy, finance, metals, and shipping sectors.

Looking Ahead: Non-U.S. companies contemplating or engaged in business in Iran should review their activities and, even if in sectors not yet identified, consider the risk of sanctions on further sectors of the Iranian economy.

Following escalating tensions between the United States and Iran capped by an Iranian missile strike on two U.S. air bases in Iraq, the Trump administration announced a new round of sanctions on January 10, 2020. These sanctions target sources of revenue, including major Iranian companies operating in the metals sector, that might be "used to fund and support [Iran's] nuclear program, missile development, terrorism and terrorist proxy networks, and malign regional influence," as well as certain senior Iranian officials determined to be complicit in the missile strikes.

Executive Order Targeting Additional Sectors of Iranian Economy

President Trump Executive Order 13902 authorizing sanctions relating to dealings in the construction, manufacturing, mining, and textiles sectors of the Iranian economy, as well as additional yet-to-be-named sectors in the future. As U.S. companies have long been prohibited from doing business in Iran, these new sanctions are aimed at the activities of non-U.S. companies and individuals, constituting, in effect, new "secondary" or extraterritorial sanctions.

The executive order provides the Secretary of the Treasury—in consultation with the Secretary of State and through the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC")—broad authority to block the property and interests in property of any person determined to, inter alia:

Operate in the construction, mining, manufacturing, or textiles sectors of the Iranian economy, or any other sector of the Iranian economy specified in the future; Knowingly engage in a significant transaction for the sale, supply, or transfer of significant goods or services in connection with above-listed sectors; or Materially assist, sponsor, or provide financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests...