Trump Threatens to Seize Frozen Iranian Assets Over Middle East Ship Damages

US President Donald Trump has threatened to seize frozen Iranian assets to cover “any and all damages” to ships and cargo damaged due to the conflict in the Middle East. Iran has hit back, with Foreign Minister Abbas Araghchi warning that the move sets an “incendiary precedent” that could have global ramifications.

Trump took to Truth Social on Thursday, warning that “from this point forth, any and all damages done to Ships, Cargo, or anything related thereto, will be paid for by Iranian Money that the United States has in its possession, and controls.”

He added that “these damages may be very substantial,” describing it as “the fair and equitable thing to do.”

The remarks came hours after Yemen’s Houthi rebels, a group with strong ties to Iran, claimed strikes on two Saudi oil tankers in the Red Sea. The US has also accused Iran of targeting vessels in the Strait of Hormuz, while Tehran has insisted that any passing ships should abide by the regulations it imposed.

In an earlier post, Trump warned Tehran that it would face “major military punishment” over the Houthi strikes, calling the Yemeni group a “surrogate and/or proxy of Iran.” He said America dealt “very powerfully” with the Houthis a year earlier and expressed disappointment that the group is “starting up again” after acting “professionally” during the conflict with Iran.

Araghchi pushed back on Trump’s ultimatum, calling it a dangerous departure from international norms. “Seizing another nation’s assets to pay for unrelated future claims is an incendiary precedent,” he wrote on X, adding that “once governments normalize confiscation, no one’s assets are safe,” and the “ensuing chaos will not be pretty or peaceful.”

Trump did not specify which frozen funds would be tapped or under what legal authority. The US holds an estimated $2 billion dollars in frozen Iranian assets, with billions more suspended in countries such as Iraq, Qatar, Japan, and Luxembourg. The fate of some of the funds, primarily frozen by the US, was discussed during talks between Washington and Tehran before the collapse of the talks earlier this month.

The threat to confiscate Iranian funds echoes the West’s handling of roughly $300 billion in Russian sovereign assets that have been frozen since the escalation of the Ukraine conflict in 2022. Most of the funds were frozen in the EU, though the bloc has not confiscated them outright due to legal hurdles.

In 2024, the US passed legislation authorizing the seizure of Russian assets and their transfer to Ukraine, though Washington has not resorted to this yet. Moscow has denounced the asset freeze as “theft.”