The Treasury Department said it sanctioned 16 individuals and two entities involved in the production of Iranian drones, including the lethal Shahed explosive units.
The fresh round of sanctions on Thursday also targeted five companies with Iran's steel production and Iranian automaker Bahman Group and three of its subsidiaries.
The Department of Commerce also released new rules that restricts Iran's access to commercial grade microelectronics, a critical technology source.
"Our actions make it harder and costlier at every turn for Iran to continue its destabilizing behavior," said Treasury Secretary Janet Yellen in a statement.
The U.K. also sanctioned Iran in a package of their own, which additionally targeted Iranian military leaders.
The U.S. moved to sanction Iran in response to the attack over the weekend on Israel, which was largely defeated by American, Israel and other allied air defense systems.
Still, the Iranian attack, which came after an alleged Israeli strike near Iran's embassy in Syria that killed two high-ranking commanders, threatens to escalate tensions in the region.
Israeli Ambassador to the U.S. Michael Herzog said the Iranian attack "cannot go unanswered."
"We have to respond, and we will respond," he said, echoing several other Israeli officials in recent days, even though no decision has been formally announced.
The U.S. has urged Israel not to respond, and the sanctions on Thursday also serves as a signal that Iran can be targeted in other ways besides military action.
Iranian officials have threatened to attack Israel with more ferocity should they respond and also alluded to producing nuclear weapons in the event of an Israeli strike on nuclear sites.
Pentagon press secretary Maj. Gen. Pat Ryder said the U.S. does "not want to see an escalation in the Middle East region."
"But we won't hesitate to defend Israel or our forces," he told reporters.
Read the full report at TheHill.com.
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