President Donald Trump’s decision late last year to start seizing Venezuelan oil tankers throughout the high seas marks a significant shift in American economic statecraft. For more than two decades, Washington drew a clear line between its use of economic tools, notably sanctions and export controls, and its use of military capabilities. Sanctions—such as those on Venezuelan oil since 2019—put economic pressure on adversaries without crossing the line into armed conflict. Naval blockades and seizures of ships, by contrast, were military actions that the U.S. government deployed within the context of armed conflict.
But in December, Trump declared a “total and complete blockade” of sanctioned tankers carrying oil from Venezuela, and in the months since he has rapidly expanded his use of the U.S. Navy to enforce sanctions. The navy has now seized or detained at least ten tankers with ties to Venezuela. Trump also threatened tariffs on countries that ship oil to Cuba—and he appears to be quietly backstopping the threat with the Coast Guard, which has already intercepted at least one vessel bound for the island. U.S. allies and partners are following suit: in February, India seized several U.S.-sanctioned Iranian tankers, and France detained a sanctioned Russian ship in January and another earlier this month.
As statecraft, this has the potential to restore the potency of U.S. and allied sanctions, which have lost their bite in recent years. But the shift is also dangerous, inviting other countries to retaliate in kind. If Washington intends to launch a new age of hybrid economic warfare, it should develop a doctrine for when and how it uses sanctions, when it will use force to back them up, and clarity on the legal basis for its actions. Otherwise, Washington risks inviting economic, cyber, and even military retaliation by other governments and setting a dangerous precedent that adversaries could use to seize U.S. and allied property, even outside of armed conflict.
PAST ITS PRIME
Trump’s reason for turning to hybrid economic warfare is simple: he has to, at least if he wants to impose economic pressure on Washington’s oil-exporting adversaries. In recent weeks, the United States has temporarily eased sanctions on Russian and Iranian oil in response to Iran’s closure of the Strait of Hormuz and rapidly rising global oil prices. But the reality is that most of Iran’s and Russia’s oil was already available on global markets, despite U.S. sanctions.
Over the past few years, U.S. sanctions have grown less effective, particularly at reducing oil export volumes from targeted countries. After the 9/11 terrorist attacks, sanctions became a tool of first resort for U.S. policymakers and initially proved quite successful at preventing adversaries from profiting off oil sales. U.S. sanctions on Iran’s oil trade reduced exports from more than two million barrels per day in 2011 to less than a million barrels per day in 2014. That economic pressure was instrumental in convincing Tehran to agree to the Joint Comprehensive Plan of Action nuclear deal in 2015, which included relief from oil-related sanctions.
Trump also used sanctions to great economic effect during his first term. In 2018, he withdrew the United States from the Iran nuclear deal and reimposed sanctions; in the years afterward, Iranian oil exports fell by 75 percent. His “maximum pressure” sanctions campaign on Venezuela drove its oil exports, which were already in decline due to corruption and mismanagement, down from 1.6 million barrels per day in 2017 to less than 500,000 barrels per day in 2020.
Iran, Russia, and Venezuela can’t sell oil to China if the tankers can’t get there.
Iran’s oil exports began to rebound under the Biden administration, despite its decision to refrain from rejoining the nuclear deal. This rebound could have been due to the administration’s somewhat more relaxed posture on sanctions enforcement. However, the declining potency of American sanctions, not lax enforcement, better explains the rebound: the Trump administration issued more than 600 Iran-related sanctions designations in 2025, levied both on ships carrying Iranian fuel and companies buying it. Yet Tehran’s crude oil export volumes remained at approximately 1.5 million barrels per day throughout last year—similar to what they were in 2016, when the nuclear deal was in place.
Venezuela’s oil sales were also proving resistant to sanctions pressure prior to Trump’s naval blockade late last year. Although Venezuelan oil exports in 2025 were difficult to track in publicly available data, they appear to have been stable or risen compared to 2024 levels, even excluding the crude that the U.S. government authorized for import to American refineries.
Sanctions have also had comparatively little impact on the volume of Russia’s oil exports, which proved relatively stable in aggregate across 2025, despite European sanctions throughout the year and U.S. sanctions in October on Russia’s two largest oil companies, Rosneft and Lukoil. Indeed, Ukraine’s growing frustration with the impotence of Western sanctions on Russian energy exports spurred it to intensify military strikes against Russia’s energy infrastructure starting last fall and continuing this year.
ALL BARK, NO BITE
Sanctions’ bite has softened in large part because of the emergence of an alternative global economic network. U.S. sanctions long derived their power by giving companies around the world a choice: do business with Washington or with its adversaries, but not both. The United States would not physically compel a company in Europe or the Middle East to stop buying oil from Iran, for example, but a company that did so would risk being cut off from the U.S. market. That would mean losing access to the U.S. dollar, American technology, and Western insurance, as well as the ability to make payments that touched U.S. banks.
For most companies, the choice was clear. They would much rather retain access to the U.S. economy than capture whatever profits were available in much smaller economies like Iran. Today, however, a growing number of companies are taking the other side of that trade—willing to risk getting cut off from the American market because there are plenty of profits to be made elsewhere. Moreover, as the United States intensified sanctions on larger countries, like Russia, those countries began to build their own networks completely independent of the U.S. economy.
Take Russia’s energy exports. In late 2022, after Russia invaded Ukraine, Washington and its G-7 allies sought to limit Moscow’s ability to profit from oil by imposing a “price cap.” Unless Russian oil was sold at a significant discount, Russia could no longer use Western ships, banks, or insurance services to transport its crude. The goal was to reduce Russian oil revenues while keeping oil markets supplied. Russia responded by spending an estimated $10 billion on new tankers so that it could ship oil itself without relying on other countries’ services or ships that could be cut off or sanctioned. Russia also used this new fleet to sell oil to buyers in India and China who had little business in the United States and were thus willing to risk American sanctions. Today, this global “shadow fleet” of more than 1,000 ships, sanctioned by the United States and Europe, does good business.
A wholehearted embrace of hybrid economic warfare risks foreign reprisal.
This sanctions-resistant economy thrives, in large part, because of China. In 2025, it purchased some 90 percent of Iran’s oil exports and was the largest buyer of Russian and Venezuelan crude. Many large Chinese multinationals, particularly banks and international oil companies, do tend to comply with U.S. sanctions, because they value their ability to conduct business in dollars and with Western markets. For instance, after the United States sanctioned Carrie Lam, Hong Kong’s former chief executive, in August 2020, she famously had to start paying her personal expenses in cash because the city’s internationally connected banks would no longer allow her to open an account. And last fall, after the United States imposed sanctions on Russia’s Rosneft and Lukoil, major Chinese state oil firms stopped buying oil from them.
But plenty of other Chinese companies do not fear U.S sanctions. Take Kunlun, a small Chinese bank that the United States sanctioned in 2012 for transacting with Iranian banks. Kunlun is still in business, with corporate records suggesting that it has thrived despite the sanctions. Last year, Washington also sanctioned several Chinese “teapot” refineries, including the Shandong Shengxing Chemical Company, for purchasing Iranian oil. But Shandong Shengxing remains in business, and, in January, its website touted ongoing progress on construction of a new facility.
On the whole, Washington retains significant economic leverage over Beijing. The United States could inflict serious costs by sanctioning large Chinese banks, regardless of whether a particular bank was directly involved in the energy trade. The problem is that doing so would almost certainly shatter the fragile economic détente with Beijing that Trump has pursued since announcing an initial trade-war truce last May and signing a one-year trade and economic deal in November. Moreover, China can exert its own economic coercion, as it did last April by cutting off rare-earth exports to the United States. Trump is therefore unlikely to jeopardize this relationship—and his broader economic and geopolitical goals—by imposing heavy-hitting sanctions on China’s purchases of oil from American adversaries.
TO SEIZE OR NOT TO SEIZE
Trump’s use of the navy to interdict sanctioned oil tankers fundamentally changes this dynamic and restores bite to U.S. sanctions. Iran, Russia, and Venezuela can’t sell oil to China if the tankers can’t get there. But using military means for economic ends raises important legal and policy questions that the United States must now grapple with.
U.S. sanctions have long operated on a “freezing” principle: sanctioned assets are frozen, but ownership does not transfer to the United States. A sanctioned payment routed through an American bank, for example, would get stopped, but the U.S. government would not actually take possession of the money. Seizing a ship, however, means that the government takes possession of the asset, and presents a more challenging legal question.
For the time being, the Trump administration appears to be relying on provisions of U.S. law that let it seize—not merely freeze—money and resources linked to designated foreign terrorist groups. Trump named the Islamic Revolutionary Guard Corps, Iran’s military, as a terrorist organization in 2019, and is now using that designation as the legal basis for seizure. The administration has reportedly persuaded U.S. judges that at least several seized ships have links to Iran. Assuming the Trump administration prevails in court, it likely plans to sell the tankers and oil that it seized. But if Washington wants to go after more ships that lack clear ties to Iran or other terrorist-supporting states or groups, it will need to find an alternative legal theory, either under domestic law or the laws of war, to take possession of them.
The United States must also consider and prepare for how other countries will react. A wholehearted embrace of hybrid economic warfare risks foreign reprisal. Russian officials have denounced the U.S. tanker seizures as “piracy” and deployed Russian naval vessels to escort ships. Just this month, for instance, the Russian navy escorted a Russian tanker through the English Channel, creating a tense scenario that was ripe for miscalculation or military escalation. Foreign countries could also decide to issue their own sanctions and seize American cargo ships. American officials haven’t worried much about foreign sanctions in retaliation for U.S. economic coercion since, for the last two decades, they had little real-world impact. Russia, for instance, has sanctioned hundreds of people since 2022 in response to Western sanctions, with few practical consequences. But if countries respond to U.S. seizures with their own seizures of ships carrying American cargo, the risks to U.S. interests rise substantially.
SKY’S THE LIMIT?
The role of cyberwarfare further complicates U.S. strategy and policy going forward. Since the 1990s, the United States has generally eschewed hybrid economic warfare as illegitimate, long condemning, for instance, Iran’s periodic seizures of ships in the Persian Gulf. Washington’s preference for economic measures over force was always ideological as well as practical: if its many global companies became targets, the United States would face more defensive vulnerabilities.
By the early 2010s, it became clear the United States had to worry about the cyber-domain, as well. In 2014, North Korea hacked Sony Pictures after the movie studio released a film that the country’s dictator found offensive. The Obama administration sharply criticized North Korea for the move and even imposed sanctions in retaliation, and the United States has since sought to build global support for norms against the use of cyberattacks on commercial targets and critical infrastructure.
As it embraces hybrid economic warfare, however, Washington now seems to be ready to also embrace cyberwarfare. Hundreds of cybercriminal groups, for instance, are subject to U.S. sanctions, and members of Congress have already proposed issuing letters of marque and reprisal to private U.S. hackers to seize cryptocurrency that was stolen by foreign cybercriminals. Questions remain, however, including whether the United States has the right to use cyber-methods to recover sanctioned property held abroad.
Answering questions of whether and when the United States will use military or cyber means to backstop its sanctions would be easier if the United States had a doctrine of economic statecraft, an underlying set of principles to guide the use of sanctions and other coercive economic measures. Then it could add to the doctrine principles surrounding the appropriate use of force and ideally avoid a global free-for-all. In the meantime, the coming months will likely see expanded American hybrid economic warfare, with little sense of where it might be headed.
Loading…
