Responding to the Trump administration's decision to list the Iranian Revolutionary Guard Corps as a terrorist group, Iran on Tuesday officially listed U.S. military personnel in the Middle East as terrorists.

Iran's hardliner faction intends for that response to deter the U.S. from continuing its pressure campaign against Iran. It wants the U.S. to fear attacks on its forces in the Middle East. But while it is likely that the IRGC will lash out in some fashion, their fury is really a function of fear, not confidence.

The Iranian hardliners know that Trump's action will hamper the IRGC's ability to earn foreign capital. That's because foreign companies, and European ones in particular, will fear doing business in Iran lest they face new U.S. sanctions. Considering that the IRGC controls critical industries in the Iranian economy, such as the telecommunications and energy sectors, Trump's listing is a big problem for the organization.

IRGC commanding officer Mohammad Ali Jafari proved as much Sunday when he warned that “If (the Americans) make such a stupid move, the U.S. Army and American security forces stationed in West Asia will lose their current status of ease and serenity." Trying to placate the hardliners, the more-moderate foreign minister Javad Zarif called for the U.S. military's Central Command to be listed as a terrorist organization. Pro-hardliner media have also hinted at Iranian terrorist reprisals, warning that Trump's action will mean more chaos in the Middle East.

Nevertheless, it's clear the hardliners feel increasingly encircled. This situation is unstable.