WASHINGTON — The Treasury Department on Thursday reclassified Hezbollah as an Iranian proxy and sanctioned a 10-person cash-smuggling network that Washington says moved hundreds of millions of dollars to the Lebanese militia, delivering the first concrete measures in President Trump's declared "economic D-Day" against Tehran a day after the president made the threat.

The moves, alongside Vice President JD Vance's declaration that the six-month war has entered a "new phase" of economic pressure, translate Wednesday's Truth Social ultimatum into policy. Treasury Secretary Scott Bessent is scheduled to detail what he has called the "toughest sanctions in history" at a news conference Monday.

What Treasury did

The department said Hezbollah's classification, previously a "specially designated global terrorist" group, now formally identifies the organization as an "extension" of the Islamic Revolutionary Guard Corps' Quds Force. A State Department official said the change reflects "operational, financial, and logistical integration" between the two, Al Jazeera reported.

The accompanying sanctions targeted Turkish businessman Yunus Alper Yilmaz and nine couriers whom Treasury said used exchange houses in Turkey and commercial airline flights between Lebanon, Turkey, the United Arab Emirates and Iran to funnel foreign currency to Hezbollah. The network was previously run by Iranian Gen. Behnam Shahriyari, who was killed in an Israeli airstrike in western Iran in June.

Vance and Bessent

Vance, on "The Clay Travis & Buck Sexton Show" on Thursday, said the war had entered a "new phase where the most effective tool that we have is the economic pressure that we can apply to them." He called the exchange a "delicate dance" but said Iran had "felt a lot more pressure than we have" in recent weeks.

Bessent, in a CNBC interview Thursday, described the strategy as "a one-two punch" that pairs the naval blockade — which has cut commercial transits of the Strait of Hormuz to roughly 4 percent of prewar volumes, according to U.K. Maritime Trade Operations data cited by CBS — with what he vowed would be the "greatest coordinated economic isolation in the history of the world." He put allies and rivals on notice: "You are either with us or against us."

Tehran's answer

Iran's Chief of Staff of the Armed Forces, Major General Abdolrahim Abdollahi, warned Friday that any "miscalculation" by Iran's enemies would meet a "revolutionary, crushing, regret-inducing, and devastating" response, in a message on Telegram marking National Defense Industry Day. Foreign Minister Abbas Araghchi called Trump's threat "a diversion" from U.S. debt problems. Deputy Foreign Minister Kazem Gharibabadi wrote on X: "They claim Iran is on the verge of defeat and hanging by a thread, but they beg all their allies to help them!"

Tehran has also moved to blunt the pressure. Iran's Trade Promotion Organization said Friday it had finalized a preferential trade agreement with Oman — a deal Muscat has not yet confirmed — and Parliament Speaker Mohammad Bagher Ghalibaf urged Iranian and Iraqi businesses meeting in Baghdad on Thursday to trade in national currencies rather than U.S. dollars.

The China problem

China, the largest buyer of Iranian oil, rejected the campaign. "Sanctions and pressure will not help resolve the issue," Foreign Ministry spokesman Lin Jian told reporters Friday, urging "political and diplomatic" solutions. Sanctions experts told the BBC the plan's success turns on countries beyond Washington's easy reach. Imran Bayoumi, a former Pentagon policy adviser now at the Atlantic Council, said he could not "really see China agreeing to that." Michael Parker, an eight-year veteran of the Office of Foreign Assets Control, said the administration was trying to "expand the economic blast radius" by threatening any dollar-touching institution with a link to Iran, a lever he called "sort of unexplored."

Bessent is scheduled to unveil the sanctions package Monday. Brent crude settled near $93.90 on Thursday, its highest in three weeks, on expectations of a further squeeze on Iranian oil exports.