New American Approach against the Houthis: Challenges and Limits of Impact

Introduction

On the third day of his presidency (January 22, 2025), U.S. President Donald Trump issued an executive order designating Houthis in Yemen as a terrorist organization. This move raises the possibility of direct military action to undermine the military capabilities of the Iran-backed armed group. As a result, a new American approach in Yemen is taking shape —one that directly affects the trajectory of both the internal and regional conflict, but this strategy also faces many challenges.

In December 2023, the Houthis began attacking vessels traversing international shipping lanes through the Bab al-Mandab Strait— a strategic chokepoint adjacent to Yemen through which 10% of global trade and 30% of the world’s oil and gas shipments pass. The Houthi attacks forced commercial shipping to reroute around the Cape of Good Hope in southern Africa, a more expensive and time-consuming alternative to the traditional Red Sea-Suez Canal route.

Following the ceasefire agreement in Gaza between Hamas and the Israeli occupation, the Houthis temporarily halted their attacks, released the sailors they had captured along with the cargo ship Galaxy Leader"^[1] , and the U.S. aircraft carrier USS Eisenhower left the region. However, the Houthi leader has since vowed to resume attacks, this time under a new pretext: retaliating against the displacement plan for Gaza’s population. ^[2]

The Trump administration recognizes that securing the Red Sea and halting Houthi attacks on international maritime traffic requires direct cooperation with its allies in Yemen and the broader region. The policy of appeasement that had been in place since 2015 is no longer viable, as the Houthis have, by 2024, transformed from a local armed group into entity that threatens regional and global security. This evolution renders them a potential threat that could affect U.S., European, and allied regional interests—a situation that neither Donald Trump nor Republican policymakers in the White House and Congress are willing to tolerate.

The U.S. and its Arab allies could take the initiative to support Yemen’s internationally recognized government in launching a military campaign to end the Houthi rule, capitalizing on the weakening of Iran’s Islamic Revolutionary Guard Corps (IRGC) following successive defeats in Lebanon and Syria. However, such an approach hinges on several factors: the policies of the Houthis' adversaries, the group's strategic position within the "Axis of Resistance," and Trump's broader regional strategy.

A More Hardline American Approach

The executive order ^[3]  issued by the Trump administration to reclassify the Houthis as a Foreign Terrorist Organization (FTO) was not unexpected—it was the same decision that had been set in motion during the final days of his first term. Due to the Red Sea attacks, his predecessor Joe Biden’s administration had reversed its decision to remove the Houthis from the list in January 2024, although it had classified the group as a "Specially Designated Global Terrorist" (SDGT). This classification includes sanctions that allow the Treasury Department to restrict the Houthis’ access to funds in the United States or elsewhere; however, it does not criminalize providing "material support" to the group, as is the case with the more stringent FTO designation, which could force organizations to sever all ties or dealings with the group.

The contradictory policies^[4]  of the Biden administration had failed to rein in the Houthis and curb their activities in the Red Sea and within Yemen^[5]. Instead, these policies contributed to the group’s rising popularity and intensified their campaign of repression against civilians and aid workers, accusing them of espionage.

In contrast to his first term—when his administration paid little attention to Yemen [6] , given that its policy was closely tied to broader U.S. strategic interests in the Middle East: combating terrorism, strengthening ties with regional allies (particularly Saudi Arabia), and isolating Iran—Washington thus continued to ignore the lessons learned about  Yemen during the previous administrations, treating the country and its issues merely as a byproduct of strained Gulf relations or as part of the counterterrorism agenda.

Unlike his first term (2017–2020), when the Yemeni war raged amid escalating regional tensions between Iran—the Houthis’ supporter—and its Arab neighbors across the Gulf—supporting the internationally recognized government—, the situation in Yemen and the region is different in his second term. The fragile ceasefire agreement between the government and the Houthis, in place since April 2022, remains active, and the United Nations has managed to broker a roadmap between the Houthis and the Yemeni government under Omani and Saudi sponsorship. (Yemeni officials deny any participation in meetings with the Houthis in Muscat or Riyadh.) Nevertheless, such discussions are a natural outcome of the 2023 Beijing agreement between Saudi Arabia and Iran, in which Riyadh sought to stabilize the region—a move that led to the restoration of diplomatic relations between the two countries and initiated a cautious normalization of ties between Iran and other Gulf states.

By designating the Houthis as a terrorist organization, the Trump administration signals its intention to adopt a tougher stance from the outset. However, the contours of this approach are still unfolding. Will the classification become part of a strategy that employs military and political pressure points against the Houthis? Will it include providing military support to the internationally recognized government? How will the Trump administration address the Gulf perspective, which insists that ending the Yemeni war is a crucial for achieving political and economic ambitions? And what political avenues can the U.S. administration tolerate in Yemen, especially in light of its diplomatic approach to the Yemeni crisis and the discontinuation of the special envoy’s role—an office that had been active at the beginning of the Biden administration?

Many important questions remain unanswered, but the move to adopt the classification in the early days of the Trump administration is a clear indication of the United States’ intention to change course and begin escalating maximum pressure in the region against both the Houthis and Iran.

Conversely, it is likely that the classification will provoke a violent reaction from the Houthis in the Red Sea, even if the resumption of attacks is linked to the conflict in the Gaza Strip. Although they halted attacks since the Gaza ceasefire began on January 19, they have publicly vowed to resume hostilities under any pretext—be it a failure of the Gaza ceasefire ^[7] or the implementation of Trump’s plan to displace the Palestinians. The key point here is that the Houthi group may escalate its actions in the Red Sea at any moment and for any reason as an indirect response to the economic, political, and military pressures following Trump’s classification. The Houthi Deputy Prime Minister warned the United States against targeting the group or its economy, stating, “Any measures that affect the livelihoods of our people and their economic stability are tantamount to a declaration of war, and we will confront them with all our strength and ferocity. The Americans must clearly understand this message [8] .” This raises the possibility of retaliatory escalation against American interests in the Red Sea, potentially allowing the Houthis to continue their naval attacks in the absence of active combat in Gaza—thereby using such attacks as leverage to achieve gains at the expense of their adversaries within the Yemeni government.

Given the Houthis’ behavior since their inception and their ambition to position themselves as a regional force while enhancing their local authority, it is hard to believe that they would unconditionally forgo the opportunity to continue these attacks in pursuit of their objectives.

The Impact of the American Approach on the Course of the Conflict in Yemen

The Trump administration’s approach to Yemen is expected to play a decisive role in shaping the country’s future. The decisions made in the coming months—beginning with the designation of the Houthis as a terrorist organization—will not only affect Yemen’s trajectory but will also have repercussions across the Middle East. Yemen’s strategic location near the Bab al-Mandab Strait is of immense importance to global trade, and its proximity to U.S. interests raises concerns when the Houthis threaten American assets [9] , including military bases in Djibouti and the broader region. Additionally, the Iran-backed group challenges U.S. allies in the Arabian Gulf and international navigation through the Red Sea and the Gulf of Aden.

At the same time, any alliance between the Houthis and Al-Qaeda in the Arabian Peninsula (AQAP) in Yemen could pose a direct threat by enabling the planning of attacks on military and diplomatic targets, recruiting extremists, and disseminating anti-U.S. propaganda that could inspire global terrorism [10] .

Notably, Trump’s first term had a direct impact on dismantling AQAP’s infrastructure andcommunication networks in Yemen [11] .

The full ramifications of the U.S. designation of the Houthis as a Foreign Terrorist Organization (FTO) remain uncertain. However, there are clear consequences of this decision that could have serious implications for the Houthis, as well as for the economic and humanitarian situation in their areas of control. The actual impact will depend on how sanctions are implemented and how different parties to the conflict respond. The following are some of the potential consequences:

First: - Military Impact

The executive order presents an explicit threat of a wider war in Yemen. It states that “the policy of the United States to cooperate with its regional partners to eliminate Ansar Allah’s capabilities and operations, deprive it of resources, and thereby end its attacks on U.S. personnel and civilians, U.S. partners, and maritime shipping in the Red Sea [12] .” Even without direct military intervention, the U.S. decision sends a strong message to the Houthis that the administration’s approach has changed and that maximum pressure against the group will be greater than ever before—a message that the Yemeni government has welcomed enthusiastically.

Before and after the designation, senior U.S. officials met with Yemeni political and military leaders to discuss ways to counter the Houthis and thwart their attacks on shipping lanes. This has generated optimism within the Yemeni government, which hopes the move will pave the way for financial and military support from the United States in its fight against the Houthis. However, the specifics of such support remain unclear. The Yemeni government has described Trump’s return to the White House as a “turning point in curbing the Houthis[13]” and has called for a “coordinated international, regional, and local strategy led by the United States to strike and weaken the Houthis.” The chairman of the UAE-backed Southern Transitional Council (STC), Aidarous Al-Zubaidi), publicly called on the United States and the United Kingdom to share intelligence and provide weapons and training.

However, divisions among anti-Houthi forces persist, reflecting deeper rifts among U.S. allies in the Gulf Cooperation Council (GCC), which have in turn impacted the Presidential Leadership Council (PLC). The eight-member council has been fractured since its formation in April 2022, representing a power-sharing arrangement intended to create a convergence of interests among allies. Since then, the council has remained disorganized, lacking clear mandates, internal regulations governing its operations, or a defined duties and structure for its members.

The PLC has failed to integrate and restructure anti-Houthi forces, with UAE-backed forces refusing to submit to unified command. There has been no progress on the "Joint Operations Command," which was announced in 2023 as a mechanism for military coordination. The international community has also failed to present the PLC as a cohesive front, and its members have largely operated outside the interim capital, Aden. Most of the council’s meetings have been held via closed video conferences, with only two in-person meetings in December in Riyadh, which coincided with military and diplomatic discussions with Saudi and Western officials [14]  following the collapse of Bashar al-Assad’s regime in Syria and the weakening of Iran’s influence in the region.

Western actors realize that supporting any single faction within the anti-Houthi camp would only intensify internal competition due to conflicting objectives. Even with sufficient weapons, Yemeni government forces struggle with internal divisions, corruption, and a lack of institutional capacity. However, a restructuring of the internationally recognized government and its allied field forces, as well as the unification of military operations, may be necessary to ensure the success of any campaign against the Houthis.

Despite these developments, direct U.S. military intervention against the Houthis remains unlikely, given Washington’s broader strategy of de-escalating Middle Eastern conflicts and focusing its strategic attention on the Pacific region.

For their part, the Houthis have condemned the U.S. designation and threatened retaliation if it isimplemented[15] . Their immediate response to impending American sanctions appears to be the escalation of internal conflict. The group has already mobilized thousands of fighters to frontlines around the oil-rich city of Marib [16], a key gateway to Yemen’s energy resources in Shabwa and Hadramout. Controlling these areas would help the Houthis mitigate the impact of Western sanctions, which could significantly disrupt their war economy. Iranian and Houthi-affiliated media started advocating for renewed military offensives, with Iranian outlets stating: “Sanaa could preemptively consider reopening internal battlefronts, particularly by completing the liberation of Marib.” [17]

Second: - Political Impact

The designation of the Houthis as a Foreign Terrorist Organization makes the implementation of the UN-backed roadmap agreement nearly impossible. One of the expected benefits of this agreement for the Houthis was securing public sector salary payments in their areas, with Saudi Arabia and other states initially covering these payments. However, the U.S. classification could criminalize financial transactions with the Houthis, making such payments legally impossible—not only in terms of U.S. relations but also due to the repercussions this would have on the financial system in Houthi-controlled areas. Additionally, expanding access to sea ports and airports in Houthi-controlled territories is now also unlikely.

Although the Trump administration does not have a direct military solution to counter the Houthis, its classification of the group as a terrorist organization complicates international mediation efforts. Negotiations with a designated terrorist group become increasingly difficult for international actors, potentially reducing the likelihood of a political settlement and forcing a reevaluation of military solutions.

Trump’s executive order represents an attempt to counter the Houthis’ perceived victory in the Red Sea. It significantly lowers the group’s expectations of gaining political leverage from their attacks on maritime shipping. The designation may also prompt some regional countries that had shown some degree of openness toward the Houthis—particularly during the Gaza war—to reassess their engagement with the group. This is evident in the case of Iraq, which had allowed the Houthis to open offices during the conflict but is now under U.S. pressure to close them [18] . Ultimately, the U.S. designation isolates the Houthis internationally and limits their ability to secure political or diplomatic support.

Thirdly: - Economic Impact

The FTO designation will negatively impact the Houthi economy. While the group has built independent financial networks that may mitigate the effects of sanctions, the executive order will significantly restrict their available resources and financial centers, which have been established through their war economy.

While Houthi leaders themselves will not be directly affected by travel bans and asset freezes, the designation puts significant pressure on the overall economy in areas under their control. It will limit the access of banks and financial institutions in Houthi-controlled areas to the international financial system, making it difficult for traders to obtain letters of credit and insurance for importing essential goods, including food, fuel, and household commodities. Additionally, shipping and insurance companies will become increasingly cautious to work about working with importers in Houthi-controlled areas. This, in turn, could paralyze operations at the port of Hodeida, a critical revenue stream for the Houthis through customs duties. Furthermore, the designation will restrict the activities of Houthi-affiliated companies and business figures, potentially forcing them to halt operations entirely.

The designation also provides the Yemeni government and the Central Bank with internationally backed legal tools to impose comprehensive banking restrictions on Houthi financial networks. President Rashad al-Alimi, head of the Presidential Leadership Council (PLC), has instructed the Central Bank to coordinate with international partners on imposing sanctions against financial networks operating in Houthi-controlled areas—unlike previous financial pressure attempts, which failed due to a lack of international support [19] .

The anticipated measures by the Central Bank, supported by new regulations and coordination with the U.S. Treasury Department, represent the government’s first real attempt to assert its authority over the financial and banking system in Houthi-controlled areas. This comes after the UN announced an “Economic De-escalation Agreement” in July 2024, which lifted certain economic restrictions imposed by the Yemeni Central Bank on Houthi-controlled territories. That agreement, however, exposed the ongoing erosion of the internationally recognized government’s sovereignty over Yemen’s financial and banking sectors [20] .

Fourth: - Humanitarian Impact

Unfortunately, the Yemeni people are expected to bear the brunt of the fallout from the designation. Currently, 24.1 million people—80% of the population—require humanitarian assistance and protection. The Trump administration has initiated a 30-day review process for the designation, which could allow time to assess these concerns and explore ways to mitigate the worst humanitarian effects on civilians and government-controlled areas, which are not the intended targets of the U.S. executive order [21] .

However, the designation complicates the work of international organizations in Yemen, creating legal and logistical challenges in providing aid to Houthi-controlled areas, particularly given the group's direct control over the operations of these organizations. Sanctions threaten to make the normal work of relief organizations illegal, threatening the lives of those who depend on aid.

Despite this, the Houthis have shown little concern for humanitarian issues, actively promoting the narrative in their media that the designation targets the Yemeni people. Simultaneously, they create a hostile environment for humanitarian organizations operating in areas under their control. Following both Biden’s previous designation of the group and the latest Trump decision, the Houthis launched an aggressive pressure campaign against international NGOs and UN agencies. This mirrors their successful 2021 campaign to pressure the Biden administration into revoking Trump’s earlier designation during his first term.

In the wake of the latest executive order, the Houthis abducted more than 20 aid workers under false accusations of espionage. One of them died just days after being kidnapped in the group’s stronghold in Sa'ada Governorate. By maintaining strict control over aid distribution, the Houthis have turned humanitarian access from a fundamental right into a powerful weapon of control and a bargaining chip in their broader regional influence campaign.[22]

The direct humanitarian consequences of the designation are further compounded by Trump’s directive to the U.S. Agency for International Development (USAID) to “end its relationship with entities that have made payments to the Houthis, or which have opposed international efforts to counter the Houthis while turning a blind eye towards the Houthis’ terrorism and abuses. [23]” If interpreted broadly, this could lead to the U.S. cutting support for UN programs operating in Houthi-controlled areas and imposing sanctions on organizations and agencies that continue providing assistance there.

Yemen has been one of the largest recipients of U.S. humanitarian and economic aid in the Middle East under the Biden administration [24] . USAID has funded UN agencies and other international NGOs in Yemen for various programs aimed at addressing famine risks, severe malnutrition, infectious disease outbreaks, and other life-threatening issues for Yemenis.

In 2024, USAID provided nearly $620 million in aid to Yemen. Half of this amount was allocated to the World Food Program (WFP) to support 9 million Yemenis. In 2023, when USAID’s total Yemen budget reached $811 million, approximately 60% of that—around $541 million—was directed to the UN food agency [25] . However, there is little transparency regarding the extent to which the Houthis have exploited this aid to fund their military operations, as they maintain full control over UN assistance programs in Yemen.  Given the Trump administration’s approach, political considerations take precedence over humanitarian concerns. The administration is betting that if food insecurity and famine in Yemen worsen significantly, this could weaken the Houthis’ grip on power [26] . The ultimate goal is to push Yemenis in Houthi-controlled areas toward a “hunger revolution” to restore the state and its institutions.

The Trump administration’s executive order and its new approach will undoubtedly disrupt the status quo in Yemen. However, the question of who will emerge as the winners and losers remains an open, intertwined with multiple variables. These include the United States' ability to coordinate a broader deterrence and incentive package with its regional and Yemeni allies, as well as the extent to which the internationally recognized Yemeni government and its regional backers can capitalize on this opportunity through a ground military action to erode the Houthis’ hold on power. The global community still remembers the Taliban’s takeover of Afghanistan, and the Houthis aspire to replicate that scenario in Yemen.

Challenges of the New American Approach

The Trump administration’s executive order signals two key aspects: first, its military impact on the Houthis’ capabilities in coordination with regional allies, and second, its prioritization of political considerations over humanitarian concerns. The latter has long been exploited by the Houthis as an effective tool to blackmail the international community, which has often hesitated to impose sanctions for fear of exacerbating Yemen’s humanitarian crisis. However, this approach faces several challenges:

• Military and Political Options:

The executive order suggests the possibility of military action against the Houthis, yet such options remain limited. In the first year of the conflict alone, Washington spent approximately $2 billion in its efforts against the Houthis [27] . Conducting a large-scale, direct military campaign against the group poses significant military and geopolitical challenges. Nevertheless, the U.S. may opt to supply the Houthis' adversaries with the necessary weapons, effectively bolstering the Yemeni government and its allies.

The United States may prefer a strategy that blends diplomatic pressure with practical political solutions to resolve the Red Sea crisis and stabilize Yemen—leading to a peace agreement independent of the current roadmap framework. Achieving this would require strengthening the Yemeni government and balancing power between the internationally recognized administration and the Houthis. This, in turn, necessitates reinforcing the defense capabilities of government forces, unifying military factions under the command of the Yemeni Ministry of Defense, and consolidating political leadership.

To accomplish this, Washington must coordinate closely with its allies, Saudi Arabia and the UAE, to develop a shared vision for Yemen’s future and pressure the Presidential Leadership Council (PLC) into agreement [28]

• Regional Reactions:

The Gulf and Arab response to the U.S. designation of the Houthis as a terrorist organization has been shaped by broader regional dynamics. Notably, both Saudi Arabia and the UAE refrained from publicly commenting on the classification, despite considering the Houthis a terrorist group.

This cautious stance by Riyadh and Abu Dhabi reflects concerns over Trump’s broader strategy for the Arabian Peninsula and the Houthis. Gulf nations remain wary of Washington’s inconsistent responses to Houthi attacks, particularly the 2019 missile strikes on Saudi oil facilities and the 2022 attacks on UAE infrastructure. Additionally, their hesitancy is linked to the failure of the 2023 Beijing agreement, which aimed to normalize diplomatic relations between Saudi Arabia and Iran. The Gulf States are strategically preparing for the possibility that further military escalation in the region could trigger unforeseen risks in an evolving international and regional landscape.

While the Yemeni government sees the U.S. designation as a tool to pressure the Houthis and reinforce the Central Bank’s financial sovereignty, regional states fear it could reignite the war in Yemen—an outcome that would have direct consequences for them. The Houthis have consistently leveraged threats against Gulf States to influence Yemeni government decisions.

As for Iran, it is unlikely to scale back its support for the Houthis, who have solidified their role within the "Axis of Resistance" over the past year. Tehran views its allies in Lebanon as weakened, with Hezbollah facing setbacks and the overthrow of the Assad regime in Syria. Meanwhile, Iran’s proxy militias in Iraq are under increasing pressure. These developments pose a serious challenge to Iran’s “forward defense” strategy, which has been the backbone of its regional policy for decades.

Iran faces two main choices: doubling down on its regional alliances or accelerating its nuclear weapons program. The latter option is perilous, as it could lead to direct war—an outcome Tehran has long sought to avoid due to its complex internal, economic, and political challenges. Iranian Foreign Minister Abbas Araghchi recently reaffirmed Tehran’s commitment to the "Axis of Resistance," boasting that its members—particularly the Houthis—continue to challenge the United States and Israel in the Red Sea[29] . This statement signals Iran’s intent to maintain its backing for the Houthis, using them as a strategic pillar to uphold Supreme Leader Ali Khamenei’s long-term vision while avoiding direct conflict with Iran itself.

This requires a broader strategy to support Yemeni government forces to impose a new military reality on the ground and to implement stricter controls on arms smuggling into the country, including training, financing, and equipment supply, intelligence-sharing, and satellite surveillance.

• U.S. Regional Policy:

The Trump administration has demonstrated unwavering support for Israel, a stance that is fueling increasing Arab anger—particularly over plans to displace Palestinians from Gaza and the West Bank. These developments raise concerns that Trump’s second term will empower Israel as the dominant force in the Middle East while Iran’s influence recedes.

At the same time, the Houthis continue to disrupt Red Sea trade routes, using the Palestinian cause as a justification for their actions. This complicates Arab efforts to achieve regional peace, as both Israel and Iran persist in destabilizing the geopolitical landscape.

A Strategic Balancing Act

Trump’s approach to the Houthis could undermine their claims of victory in the Red Sea conflict, but success depends on two fundamental pillars:

1. The United States’ ability to coordinate deterrence and incentives within a broader political and military strategy with regional and Yemeni allies. Without Saudi and Emirati alignment with Washington’s approach, uniting anti-Houthi forces and achieving military success or deterrence will be challenging.
2. The Yemeni government's ability to overcome the challenges and limitations imposed by the designation: the complexities of implementation amidst corruption and weak infrastructure, the willingness of allies to confront the Houthis, and the possibility that measures agreed upon with the US Treasury could provoke military responses from the Houthis. The government needs to enhance its ability to deter and retaliate against attacks, striking a delicate balance between enforcing financial sovereignty and keeping UN-sponsored negotiations ongoing. The government also needs to counter Houthi strategies and propaganda designed to mitigate the impact of the designation, including using the humanitarian crisis and economic instability as leverage. This makes it difficult for the government to achieve its objectives. To address this, the government has reportedly formed a committee to manage the classification’s implementation and minimize unintended consequences[30] .

Conclusion

Achieving gains against the Houthis through a changed US approach in Yemen will depend on precise execution of policies and containment of the negative consequences of the executive order announced by the Trump administration on January 22, 2025. Most importantly, it depends on the willingness of the Yemeni government and its regional allies to deter further Houthi aggression.