US Expands Sanctions to Target Iran's Automotive Giants and Railway Operators

The US has blacklisted two of Iran's largest car manufacturers alongside major railway operators, marking a significant shift in its economic pressure campaign against Tehran from maritime and oil trade to domestic land transport and industries.

On Thursday, the Treasury Department designated Iran Khodro and Saipa—companies responsible for producing over 90 per cent of Iran’s domestic passenger cars. Additionally, penalties were applied to the state-owned Islamic Republic of Iran Railway Company, Raja Passenger Trains Company, and the private freight operator Railway Transportation Company. International suppliers to Iran’s automotive sector based in the UAE, Indonesia, and Turkey also faced targeting.

These actions form part of Operation Economic Outcast, a Treasury initiative initiated on August 24 designed to limit funding for Tehran's military conflicts, missile development, cyber activities, and the Islamic Revolutionary Guard Corps.

This latest escalation highlights the expanding scope of Washington's strategy. With American blockades restricting Iranian oil shipments through the Strait of Hormuz, Tehran has shifted toward road and rail networks to transport petroleum, chemicals, fertiliser, and other commodities. Thursday's sanctions directly address these alternative distribution channels.

“Directly targets Iran’s enablers and lays the groundwork for the United States and our partners to drain the regime’s revenue once and for all,” stated US Treasury Secretary Scott Bessent.

The announcement coincided with Washington's broader diplomatic efforts to increase international oversight. The US indicated it would advocate for an independent multilateral body to oversee sanctions compliance following vetoes by Russia and China that blocked the renewal of a UN monitoring panel.

Disputes persist regarding UN sanctions on Tehran, with the US, Britain, France, and Germany invoking the 2015 nuclear deal's “snapback” mechanism last year to reinstate former penalties, a legal interpretation rejected by Russia and China.

Iran's automotive sector, initially targeted by Washington in 2013, experienced temporary relief following the 2015 nuclear agreement before sanctions were reinstated in 2018. The subsequent departure of European manufacturers like PSA Group and Renault forced Iranian producers to depend more heavily on domestic output and Chinese parts, leaving foreign suppliers vulnerable to current US measures.

Under the new measures, the US gains the authority to penalize individuals and enterprises operating within Iran’s automotive and rail industries.