President Donald Trump announced on Tuesday that the United States was withdrawing from the nuclear agreement between Iran and world powers, and that it would reinstate the punitive sanctions suspended under the 2015 accord.
Iran has accused the US of 'psychological warfare'.
The sanctions cover a range of of industries — from transportation and petroleum to insurance and finance — and will gradually come back into force over next six months.
It is not clear whether Trump's decision will lead to a collapse of the agreement, which involves five other countries.
Renewed nuclear sanctions would certainly cause severe problems for Iran’s economy, but much of the damage has already been done by the uncertainty created by the US and myriad home-grown problems.
Trump's decision to restore sanctions was effective immediately, and will affect a range of industries that were able to engage with Iran under the nuclear agreement.
But the Treasury Department said it would give businesses and individuals time for an "orderly wind down of activities."
Goods covered: Aircraft, carpets, food, autos, etc
In a 10-page document, the Treasury said sanctions enforcement would begin Aug. 6 on activities that include Iran's purchase of commercial aircraft and services, Iran's exports of carpets and food to the United States, and Iran's trade in dollars, precious metals, industrial software, sovereign debt and the automotive sector.
On November 4, sanctions enforcement would begin on industries that include shipping, oil, petrochemicals, insurance, energy and specialized banking and financial services.
The sanctions' effects will depend partly on how non-American businesses and foreign governments respond, and whether they decide to risk U.S. penalties.
The most vulnerable Iranian industry may be oil, said Farhad Alavi, managing partner of Akrivis Law Group, a Washington law firm that specializes in international trade. The old U.S. sanctions, he said, "caused a severe drop in Iran oil exports - it was selling oil under the table at a discount."
The deal could survive
Making good on a campaign promise to exit the nuclear agreement, Trump described it as so weak and lopsided in Iran's favor that it was "a great embarrassment to me as a citizen and to all citizens of the United States."
He faulted it for allowing Iran to eventually resume enrichment of nuclear fuel and for what he described as its failure to limit Iran's missile development and "other malign behavior, including its sinister activities in Syria, Yemen and other places all around the world."
But the American withdrawal does not necessarily mean the Iran agreement collapses — at least not immediately.
Britain, China, France, Germany and Russia are still parties to the agreement.
If they all agree to maintain it, the effect of restored American sanctions may be softened.
Trump also held out the possibility of negotiating a new agreement with Iran, though its leaders have said that won't happen. Here's what was in the deal.
If the deal collapses, Iran will presumably be free to restart thousands of centrifuges mothballed under the agreement. That would let it increase its uranium fuel supply without the close monitoring of the International Atomic Energy Agency.
Iran has said it could restore its uranium-enriching capability quickly, which could put it closer to a weapons path. But that might put at Iran risk of economic isolation, at least by the European countries that agreed to the accord.
What nuclear capabilities did Iran have before?
Iran had the technical capability to become a nuclear-weapons state, experts say.
According to American assessments, the Iranians once operated a covert nuclear weapons development program that they discontinued in 2003.
While Iran has repeatedly asserted that its nuclear activities are for peaceful use only, it had amassed a stockpile of uranium that further refining could have turned into fuel for nuclear bombs.
By some reckonings, Iran needed only a few months to make the required bomb fuel. It would have needed considerably more time to make a reliable warhead for a missile to deliver such a weapon.
Iran's nuclear capabilities at the time the agreement was reached reflected a long-standing effort by the country to harness nuclear power. It began well before the revolution that overthrew the American-backed shah in 1979.
Iran is a signer of the Treaty on the Non-Proliferation of Nuclear Weapons, requiring it to use nuclear energy exclusively for peaceful purposes.
Despite Iran's repeated denials, questions began to intensify more than 15 years ago about whether it had worked clandestinely to develop nuclear weapon capabilities.
Led by the United States, Western powers sought to pressure Iran with economic sanctions to curb its increasing capacity to enrich uranium and produce plutonium, the fuels of atomic weapons.
After years of off-again-on-again negotiations, an agreement was reached in 2015. It was endorsed by the United Nations.
