WHEN it has come to punishing recalcitrant foreign countries, President Donald Trump’s bark has sometimes been worse than his bite. A fierce announcement from the Oval Office of new import tariffs or impending fire and fury has been followed by a lull. Loopholes and exemptions have emerged. The threat on May 8th of the “highest level of economic sanction” on Iran, however, seems to mean exactly what it says.

Again, there is a breathing space, of three to six months, before stinging sanctions lifted two years ago are reinstated. These include cutting Iran off from dollar financing, imposing “significant” reductions on its hydrocarbon exports and banning American companies from doing any business there. Most believe Steven Mnuchin, the treasury secretary, that after the “wind-down period” sanctions, both primary and secondary, “will come back into full effect”.

The threat of secondary sanctions resonates most in Europe. As Carl Bildt, a former Swedish prime minister, tweeted: “US Iran sanctions are hardly hitting any US companies, but aim primarily at European ones.” This matters to the European Union not just because its businesses will be hurt (see chart). If the EU is to rescue the nuclear deal, it knows Iran will need to see economic benefits.

The immediate impact of the sanctions on Iran itself may be mitigated by its ability to keep selling oil to China, a signatory to the nuclear deal, and to India. But, deprived of European trade, technology and investment, Iran is now unlikely to meet the IMF’s forecast of 4.3% GDP growth this year.

The EU has mooted various ways of helping its businesses continue to operate in Iran. Finance could be arranged through euro-denominated export credits, loans from the European Investment Bank or bilateral lines of credit, such as one worth €5bn that Italy signed in January for projects in Iran. But many companies will be forced to comply with sanctions anyway. Airbus, for example, has delivered just three of 100 aeroplanes ordered by Iran in 2016 for $19bn. But because it uses American components, Airbus must obey American rules.

The EU is even considering reviving “blocking” regulations introduced in 1996 in response to American sanctions on Iran, Libya and Cuba, compelling European companies to ignore them. Another, high-risk, approach would be to challenge the sanctions at the World Trade Organisation. None of this, however, solves the big problem, that for most companies America matters far more than Iran—both in terms of opportunity and risk. Two banks, HSBC and BNP Paribas, were fined billions of dollars in America in 2012 and 2015 respectively over their dealings in Iran.

Total, a French oil giant that made the first big European investment in the energy industry in Iran, in the South Pars gasfield, has said it will seek an American waiver to carry on working. However, its majority stake in the project will probably be taken over by its Chinese partner. Unlike Europe, China is not averse to challenging Mr Trump’s America.