The US has vowed to impose the "strongest sanctions in history" on Iran.
Point of view
"The sting of sanctions will be painful if the regime does not change its course"US Secretary of State
The news comes less than two weeks after President Donald Trump pulled out of the landmark 2015 nuclear agreement with the country.
US Secretary of State Mike Pompeo said Tehran will have to battle to keep its economy alive:
"The sting of sanctions will be painful if the regime does not change its course from the unacceptable and unproductive path it has chosen to one that rejoins the league of nations. These will indeed end up being the strongest sanctions in history when we are complete."
When Trump withdrew from the nuclear deal, Iranian lawmakers reacted by burning an American flag in the country's parliament. The latest announcement, one Iranian official said on Monday, was proof the US is seeking regime change in Tehran.
EU leaders have vowed to keep the nuclear deal alive but new US sanctions could affect European companies.
Pompeo warned that US allies could also be subject to the new sanctions regime if they trade or otherwise engage with Iran.
"We understand the our repositioning of sanctions and the coming pressure campaign on the Iranian regime will pose financial and economic difficulties for a number of our friends. Indeed it poses economic challenges to America as well, these are markets our businesses would love to sell into as well. We want to hear their concerns, but you know we will hold those doing prohibited business in Iran to account".
Both French aerospace company Airbus and its US competitor Boeing stand to lose major deals with Iran Air. The Boeing contract was reportedly worth more than 15 billion euros and was expected to create thousands of US jobs.
Several international energy companies say they are also reconsidering their current projects in Iran.