US tightens economic squeeze on Iran with auto, rail sanctions as troops deploy to Middle East

The US Treasury Department imposed sanctions on Iranian automakers and rail companies Thursday (local time), intensifying its "Operation Economic Strangulation" campaign as the Defense Department deployed an additional 10,000 troops to the Middle East.

Treasury Secretary Scott Bessent said in a press release that "Operation Economic Strangulation has severely degraded the Iranian regime's ability to fund its war machine and illicit terrorism around the world," adding that "today's actions lay the groundwork for the United States and our partners to permanently drain this regime's revenues."

The sanctions targeted Iran's two largest automakers — Iran Khodro Co. (IKCO) and SAIPA — along with their subsidiaries that manufacture commercial vehicles such as buses and trucks. Also swept into the sanctions were Niroo Motor Shiraz, Iran's largest motorcycle manufacturer, and auto parts suppliers based in Indonesia, the UAE, Turkey and Hong Kong.

The Treasury said the automotive sector "is deeply intertwined with Islamic Revolutionary Guard Corps-affiliated networks, facilitating corruption, trade-based money laundering and the exploitation of prisoner labor," and that "dismantling these channels is essential to cutting off IRGC funding."

The Treasury also announced sanctions against the state-owned Islamic Republic of Iran Railways and Raja Passenger Trains Co., a private rail operator that has taken over some passenger services from the state railway. The department said Iran has grown reliant on its rail sector to sustain oil transport and trade in the face of a US maritime blockade around the Strait of Hormuz.

Also added to the sanctions list were Heavy Equipment Production Co. (HEPCO), a manufacturer of mining and road-construction machinery, along with its Chinese subsidiary and foreign companies that supply raw materials to Iran's steel industry.

"The Oct. 2 sanctions target not only Iranian companies but also the foreign suppliers and intermediaries that support them, severing the international procurement networks the Iranian regime relies on to maintain its industrial base and evade US pressure," the Treasury said.