The Trump administration is poised to announce that it will blacklist Iran's entire financial sector, dealing another blow to an economy that is already reeling under U.S. sanctions. The move could deepen tensions with European nations over Iran.

Administration officials and congressional aides say the decision is expected on Thursday. The move is expected to hit 14 Iranian banks that have thus far escaped the re-imposition of U.S. sanctions and, more importantly, subject foreign, non-Iranian financial institutions to penalties for doing business with them. Thus, it will effectively cut them off from the international financial system.

The officials and aides spoke on condition of anonymity because they were not authorized to publicly preview the decision, which is to be announced by Treasury Department in mid-afternoon. It was not immediately clear if the blacklisting would come with a grace period or tailored exemptions that would permit some limited transactions to continue.

European nations have opposed the blanket financial services blacklisting because it will open up their biggest banks and and other companies to U.S. penalties for conducting business with Iran that had previously been allowed.

The move comes as the U.S. has stepped up efforts to kill the 2015 Iran nuclear deal that President Donald Trump withdrew from in 2018. Since then, Trump has steadily increased pressure on Iran by imposing sanctions on its oil sales, blacklisting top government officials and killing a top general in an airstrike.

Last month, the administration unilaterally announced that it had restored all international sanctions against Iran that had been eased or lifted under the nuclear deal. And, having been ridiculed by most members of the U.N. Security Council for claiming to have retained the right to restore international sanctions despite no longer being a member of the deal, the administration has continued to seek to boost its leverage with Iran.

While almost the entire rest of the world, which has an interest in preserving the deal, has vowed to ignore those sanctions, violating them will come with significant risk of losing access to the U.S. financial system. Some believe that Thursday's expected action could destroy any chance of salvaging the accord by making it impossible for Iranian banks to have any relationships with their foreign counterparts.

Critics say the sanctions will further cut off Iran's ability to import humanitarian goods that are especially needed during the coronavirus pandemic, although U.S. officials insist there are carve-outs for legitimate items such as food and medicine. Relief organizations and others, however, say the exemptions still starve the Iranian people of essentials.

Thursday's planned announcement, which was first published by The Washington Post, follows months of internal administration debate about the best way to proceed with Iran, particularly as Trump faces a difficult reelection challenge against former Vice President Joe Biden, who has said he wants to return to the nuclear deal.

Until Wednesday, the Treasury Department had opposed the step, arguing that it would adversely affect U.S. relationships with Europe. However, Iran hawks in Congress and outside the government have long sought the cut-off.