Trump’s unique opportunity to reset relations with Iran

Following last weekend’s constructive talks in Oman, the Trump administration has a rare opportunity to reset relations with Tehran — but only if it backs diplomacy with policy shifts that genuinely turn the page.  

Just weeks after expanding the U.S. military presence and a month after initiating a bombing campaign against targets in Yemen, both U.S. and Iranian officials have confirmed a second round of talks will take place, likely in Rome or Oman. Trump’s envoy, Steve Witkoff, recently cast this diplomatic overture as a bid to resolve tensions “through dialogue” instead of military escalation.

Yet diplomacy built atop coercion is nothing new — and it has consistently failed. Trump torched the 2015 nuclear deal and cratered Iran’s economy with his “maximum pressure” campaign, yet failed to deliver a less defiant Islamic Republic. If Trump thinks Tehran will simply return to the table, he underestimates the depth of mistrust his first term rekindled.

Tehran has already rejected the suggestion of a Libya-style nuclear deal, a model seen in Iran as a prelude to eventual regime change. As top diplomat Abbas Araghchi put it, Iran’s initial hesitation to engage reflects not “stubbornness” but the hard lessons of past U.S. policy. For any deal to succeed, Trump must abandon the failed playbook of ultimatums in favor of building trust and embracing what he claims to understand best: the power of business.

A proactive targeted sanctions carve-out — large enough to signal sincerity, narrow enough to exclude U.S.-designated entities — could shift Tehran’s calculus. One model Trump could follow is authorizing the import of goods and services from Iran’s private-sector entrepreneurs, akin to the allowances under in the Treasury’s Cuba sanctions regulations.  

Permitting specified trade or investment would not only show good faith, it would create the kind of durable incentives that reshape long-term strategies. Such a gesture would also serve as a stabilizing guarantee at the outset of negotiations, reducing the risk that talks unravel prematurely or collapse under the weight of long-standing mistrust. Done right, it would shift the onus of escalation back onto Tehran, forcing its leadership to decide whether to reciprocate or retreat. With negotiations still fragile, targeted sanctions relief could inject momentum into a process that risks stalling before it even gets off the ground. 

This approach doesn’t just apply to foreign policy — it’s a regulatory imperative. The U.S. dollar–dominant paradigm has leaned too heavily on sweeping, country-wide sanctions designed for a less traceable world. For decades, sanctions have been Washington’s tool of choice, imposed broadly, enforced aggressively and rarely recalibrated. But in an era of real-time financial surveillance and artificial intelligence, this blunt instrument increasingly misaligns with the dynamics of today’s data-rich global economy. Banks navigate opaque risks, humanitarian channels falter, and targeted regimes often adapt faster than their presumed pressure points collapse. 

Few cases illustrate this dysfunction more clearly than U.S. foreign policy on Iran. U.S. sanctions have metastasized into a politically entrenched doctrine. Even modest adjustments are cast as capitulations or appeasement. A serious reassessment of this framework is long overdue. A modern sanctions architecture should enable engagement where possible, isolate where necessary, and move beyond outdated habits of indiscriminate pressure. 

Sanctions have not — and will not — break Iran’s ruling elite. They enrich regime cronies operating in black markets, hollow out civil society and discourage lawful engagement. No president has ever replaced coercion with economic engagement as the implicit guarantor of U.S. diplomacy with Iran. Trump could be the first. 

Trump’s business instincts should guide him here. Lasting agreements, whether real estate deals or diplomatic breakthroughs, aren’t built on threats but on mutual interest. History proves it: President Richard Nixon opened China through trade, not ultimatums. Europe cemented postwar peace through economic integration. Washington has long championed markets as tools to promote openness and reform — yet Iran, like other heavily sanctioned states, is treated as an anomaly. 

Remarkably, Tehran is now signaling openness to U.S. investment. Even Iran’s supreme leader is reportedly open to American business involvement in the country’s vast, untapped economy — a rare greenlight that offers Trump an opening no previous president has had. 

Only Trump has the political capital to forge a new beginning, grounded in earned trust and a deal that replaces coercion with commerce. A Democrat proposing it would be pilloried as weak. But Trump — a president who once ordered Qassem Soleimani’s assassination and spent his first term antagonizing Tehran — has the credibility to pivot without appearing soft to Washington’s most hawkish factions. Just as only Nixon, a staunch anti-communist, could go to China, only Trump can chart a new course with Tehran. But only if he chooses to trade bravado for statecraft. 

Trump’s letter cracked open the door with Tehran. A well-timed act of commercial diplomacy could push it wide open. The first round of talks showed that there is mutual will to reset U.S.-Iran diplomacy. Now is the time to trade in Washington’s exhausted playbook on Iran in favor of a smarter, more adaptive approach: one attuned to the realities of an interconnected world, where diplomacy is increasingly underwritten by global markets and shared economic interests. 

Only such an approach can end a cycle of hostility that sanctions have never been able to break. 
 
Mohsen Farshneshani, Esq., is the principal attorney at the Sanctions Law Center, a boutique law firm specialized in economic sanctions, and serves as an adviser at DAWN MENA.