Trump says anyone trading with Iran won't trade with U.S. as sanctions kick in

New U.S. sanctions against Iran have taken effect, and President Donald Trump, who defied Washington's allies to impose them, pledged that firms doing business with Tehran would be barred from doing business with the United States.

Iran dismissed a last-minute offer from the Trumpadministration for talks, saying it could not negotiate while Washington had reneged on a 2015 deal to lift sanctions inreturn for curbs on Iran's nuclear program.

Trump decided this year to pull out of the agreement,ignoring pleas from the other world powers that had co-sponsored the deal, including Washington's main European allies Britain,France and Germany, as well as Russia and China.

The European countries have promised to try to mitigate theimpact of renewed U.S. sanctions to persuade Tehran to continueto abide by the deal's terms. But that has proveddifficult:European companies have pulled out of Iran, arguing theycannot risk the prospect of damage to their U.S. business.

"These are the most biting sanctions ever imposed, and inNovember they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the UnitedStates. I am asking for WORLD PEACE, nothing less!" Trumptweeted on Tuesday.

We are always in favour of diplomacy and talks. ... But talks need honesty.- Iran's President Hassan Rouhani

White House national security adviser John Bolton said onMonday that Iran's only chance of escaping sanctions would be to takeup an offer to negotiate with Trump for a tougher deal.

"They could take up the president's offer to negotiate withthem, to give up their ballistic missile and nuclear weapons programs fully and really verifiably," Bolton told Fox News.

"If the ayatollahs want to get out from under the squeeze,they should come and sit down. The pressure will not relent while the negotiations go on," said Bolton, one of theadministration's main hawks on Iran.

'Remove the knife'

Washington accepts that Iran has complied with the terms ofthe 2015 deal reached under Trump's predecessor, Barack Obama,but says the agreement was flawed because it is not strenuousenough. Iran says it will continue to abide by the deal for now,if other countries can help protect it from the economic impactof Washington's decision to pull out.

The so-called snapback sanctions target Iranian purchases ofU.S. dollars, metals trading, coal, industrial software and itsauto sector.

In a speech hours before the sanctions were due to takeeffect, President Hassan Rouhaniof Iran rejected any negotiations as long as Washington was no longer complying withthe deal it reached three years ago.

"If you stab someone with a knife and then you say you wanttalks, then the first thing you have to do is remove the knife,"Rouhani said in a speech broadcast live on state television.

"We are always in favour of diplomacy and talks. ... Buttalks need honesty."

He dismissed the proposal for talks as a stunt to sow chaosin Iran and confuse American voters at home ahead of mid-termelections in November. He said Washington was becoming isolatedinternationally and would come to regret imposing sanctionsagainst the views of its allies and other world powers.

The nuclear deal is closely associated in Iran with Rouhani,a relative moderate who won two landslide elections on promisesto open up its economy to the outside world.

European countries fear that by abandoning the deal,Washington risks undermining Rouhani and strengthening his more hardline opponents, who have long argued that theWest would never allow Iran to prosper.

In a joint statement on Monday from Britain, France, Germanyand the EU as a bloc, they said: "We deeply regret the reimposition of sanctions by the U.S."

Since the sanctions were initially lifted two years ago,Iranian oil exports have risen.

But most Iranians have yet to see major economic improvementas a result of the deal, and the prospect that Washington wouldre-impose sanctions helped drive a collapse in the value ofIran's currency this year, raising the cost of imports.

There have been protests in Iran against rising prices, andthe government has responded firmly.