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KEY POINTS President Donald Trump said Wednesday the U.S. will "immediately impose additional punishing economic sanctions" on Iran.

Trump's announcement represents a decision not to escalate a military confrontation after Iran fired missiles at bases in Iraq housing U.S. forces.

Trump said Iran "appears to be standing down."

WASHINGTON — Less than a day after Iran fired ballistic missiles at U.S. targets in Iraq, President Donald Trump on Wednesday stepped back from escalating a military confrontation with Iran. "As we continue to evaluate options in response to Iranian aggression, the United States will immediately impose additional punishing economic sanctions on the Iranian regime," Trump said in an address to the nation. Sanctions, however punishing, would represent a marked de-escalation of the current tensions between the U.S. and Iran, which began Thursday when an American drone killed top Iranian Gen. Qasem Soleimani. In response to the extrajudicial killing of Soleimani, Iran on Tuesday fired 15 missiles at several Iraqi military bases housing U.S. and coalition forces involved in the fight against ISIS. But instead of announcing a stepped-up military offensive, Trump used his prepared remarks on Wednesday to strike an uncharacteristically positive note. "I'm pleased to inform you, the American people should be extremely grateful and happy," Trump said. "No Americans were harmed in last night's attack by the Iranian regime. We suffered no casualties. All of our soldiers are safe and only minimal damage was sustained at our military bases. Our great American forces are prepared for anything." "Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world," Trump said. "No American or Iraqi lives were lost because of the precautions taken, the dispersal of forces and an early warning system that worked very well."

President Donald Trump addresses the nation from the White House on the ballistic missile strike that Iran launched against Iraqi air bases housing U.S. troops, Wednesday, Jan. 8, 2020, in Washington, as Vice President Mike Pence and others looks on. Evan Vucci | AP

Trump defended the controversial U.S. decision to kill Soleimani while the general was visiting Iraq, calling him a "terrorist." But the president stopped far short of threatening further military action. Trump said the "powerful sanctions will remain until Iran changes its behavior."

A centerpiece of Trump's Iran strategy

Tighter sanctions have become a hallmark of the Trump administration's approach to Iran, part of what the White House calls a "maximum pressure campaign." The sanctions have succeeded in punishing Iran for a series of destabilizing activities throughout the Middle East. But beyond punishment, it has not always been clear exactly what the United States hopes to achieve by increasing sanctions. Last month, State Department officials said the pressure on Iran "will intensify in 2020, as the U.S. seeks to rein in Tehran's pursuit of nuclear infrastructure and regional aggression." "There will be more sanctions to come, and Iran's economic problems and challenges are going to compound in 2020," a senior State Department official said on a Dec. 30 call with reporters. "They are already deep into a recession, and we are also seeing Iran come under greater diplomatic isolation." Another senior State Department official added that the Trump administration has sanctioned approximately 1,000 individuals and entities with links to Iran's malign activities. "What we are doing is denying the regime the revenue that it needs to run an expansionist foreign policy, and by that policy, Iran has less money to spend today than it did almost three years ago when we came into office," said the official, who spoke on the condition of anonymity. In December, Secretary of State Mike Pompeo announced another round of fresh sanctions, this time targeting Iran's largest shipping company and biggest airline, saying the companies are aiding the regime's alleged proliferation of weapons of mass destruction. "As long as its malign behaviors continue, so will our campaign of maximum pressure," Pompeo said during a Dec. 11 press conference at the State Department.

A shift away from recent rhetoric

Trump's post-attack response represents a stark departure from the fiery language and threats of destruction he issued to Iran during the first several days after the killing of Soleimani. As recently as Tuesday afternoon, Trump told reporters at the White House that "if Iran does anything that they shouldn't be doing, they're going to be suffering the consequences and very strongly." Trump also said the U.S. was "totally prepared" for Iran to retaliate and "we're prepared to attack if we have to as retribution." There were no immediate reports of casualties, leading some analysts and government officials to suggest that Iran may have deliberately avoided killing American service members. Both Trump and Iran's foreign minister, Javad Zarif, insist their nations are not looking for war and that both the killing of Soleimani and the retaliatory strikes Tuesday were defensive maneuvers. Late Tuesday, Zarif tweeted, "We do not seek escalation or war, but will defend ourselves against any aggression." For Trump, the fact that Tuesday's missile attacks did not kill U.S. service members or target U.S. bases were significant factors in his decision about how to respond. "My gut was that [Iran] are not trying to escalate, they are not trying to kill Americans, they are trying to have their show of force," Thomas Karako, director of the Missile Defense Project at the Center for Strategic and International Studies, told CNBC. "What they were trying to do is have a bunch of missiles fly, pound their chests a little bit and have a show of force without killing Americans. To do that, though, you want to use a tool that will best guarantee that result and from initial appearances, they seem to have used some of their precision-guided missiles," Karako added.

Next steps for the US and Iran