Donald Trump says any country doing business with Iran will face 25 per cent US tariffs “effective immediately”.
The White House also reiterated its threat to use military action against Tehran over its violent crackdown against economic protesters.
At least 646 people have now died in clashes between demonstrators and security forces across Iran, according to a monitoring group.
White House press secretary Karoline Leavitt has told reporters that airstrikes are among the “many, many options” that the US president is considering but that “diplomacy is always the first option for the president”.
“We are ready for war but also for dialogue,” Iranian foreign minister Abbas Araghchi responded.
Mr Trump and his national security team have been weighing a range of potential responses against Iran including cyber-attacks and direct strikes by the US or Israel, according to two people familiar with internal White House discussions.
But the US president also said Tehran had been in touch and “they want to negotiate” to prevent such action.
