The Biden administration is revamping the way the U.S. uses punitive sanctions, aiming to stem sweeping pressure campaigns, avoid collateral economic damage and act jointly with allies rather than unilaterally, according to people involved in the planning process.

The administration has nearly completed an extensive review of U.S. sanctions policy, which is expected out near the end of summer, according to one official. While details are still being ironed out, Biden administration officials have foreshadowed elements of the new strategy in a series of actions, including the planned easing of economywide sanctions against Iran.

Details of President Biden’s approach also were described by current and former administration officials as well as by incoming officials during congressional meetings.

The policy overhaul sets up a sharp departure from the Trump administration, which imposed sanctions as a foreign policy tool more frequently than previous U.S. administrations to target broad sectors of the economy in Iran, North Korea, Venezuela and elsewhere in an effort to exert economic pressure against adversaries.

The sanctions efforts succeeded in helping push Iran and Venezuela into economic contractions and severing North Korea’s ties to global financial and trade networks, achieving short-term goals.

However, the U.S. pressure didn’t produce major new diplomatic agreements or substantive changes in the conduct of adversaries, leading to questions about their value as a stand-alone tool.

The Biden administration and its incoming officials maintain that the use of sanctions must be part of larger diplomatic efforts involving cooperation from allies and related forms of persuasion to bring about foreign-policy goals.

“This work requires close collaboration with Congress, across the executive branch, and with foreign counterparts, the private sector, and civil society,” Elizabeth Rosenberg, nominated to help oversee sanctions policy as an assistant Treasury secretary, told senators in June.

Elizabeth Rosenberg was nominated to work on the administration’s sanctions policy.

Elizabeth Rosenberg was nominated to work on the administration’s sanctions policy.

Photo: Stefani Reynolds/Bloomberg News

Former Trump administration officials say the Biden administration is wasting diplomatic leverage built over the last four years—especially regarding Iran’s nuclear program—by easing sanctions without sufficient commitments from Tehran and other governments.

Those officials say they are concerned that relying on international consensus and waiting for allies often require policy compromises that can undermine U.S. national security. That view was the basis for the U.S. acting alone in implementing many of its most prominent foreign-policy decisions.

By seeking to rejoin the nuclear deal and repeal the sanctions, for example, “the Biden administration is about to empower the world’s foremost state sponsor of terrorism again,” Mike Pompeo, secretary of state under Mr. Trump, said in June.

Current and incoming officials said coordinated action built on international consensus will strengthen the intended political pressure of sanctions by widening their global enforcement and multiplying the voices of censure.

“Our focus is on making sure that we’re moving from unilateral action, which has been what has defined U.S. policy over the last four years, to really working with our partners,” a senior administration official told The Wall Street Journal.

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In an era when the Treasury Department’s financial tools often are seen as a first resort to combat threats, “a carefully calibrated, strategic approach…is more important than ever,” said Ms. Rosenberg, who has been advising the administration on the sanctions review.

Some tenets of the Biden administration’s sanctions policy already are emerging as officials put them into practice. Some of the administration’s early sanctions moves have been coordinated with Western allies, most notably its hallmark foreign-policy initiative, a plan to lift key sanctions against Iran in exchange for a return to compliance with the 2015 nuclear deal.

Former President Donald Trump’s exit from the accord in 2017 and subsequent imposition of an economywide pressure campaign against Iran was criticized by some of Washington’s trans-Atlantic partners.

However, the Biden administration’s removal of several former Iranian government officials from its blacklists in recent weeks spurred criticism that it is rushing to dismantle sanctions being used to pressure Tehran.

Ebrahim Raisi, Iran's recently elected president, is subject to sanctions imposed by the Trump administration.

Ebrahim Raisi, Iran's recently elected president, is subject to sanctions imposed by the Trump administration.

Photo: Ali Mohammadi/Bloomberg News

Biden administration supporters say the move sends a message that punitive actions are “about coercing the target to change in a way that’s beneficial for the international community and…not just merely trying to bully or punish an individual,” said Jason Barlett of the Washington-based Center for a New American Security think tank.

The Biden administration also has sought to collaborate with allies on sanctions against China for human-rights abuses in Hong Kong and in its western provinces, against Russian officials for attacks on political opponents and dissidents, and blacklisting Belarus officials for escalating political repression.

“We have to go back to first principles with our European partners to figure out really where it is that we should be applying the pressure and making sure that we’re doing that in close coordination,” the senior official told the Journal.

Analysts say the Biden administration has eased diplomatic tensions with allies through sanctions decisions on Iran as well as on other issues. In April, allies commended the Biden administration decision to remove officials of the International Criminal Court from a sanctions blacklist, where they were placed by the Trump administration.

In May, German officials were buoyed by the U.S. decision not to sanction Nord Stream 2, the multibillion-dollar natural gas pipeline being built by European and Russian companies.

A Nord Stream 2 facility in Russia. President Biden decided against sanctioning the pipeline project.

A Nord Stream 2 facility in Russia. President Biden decided against sanctioning the pipeline project.

Photo: Andrey Rudakov/Bloomberg News

The pipeline decision drew criticism from Republican and Democratic lawmakers who said it bolstered Moscow’s strategic foothold in Europe, while some former U.S. officials said it helped cultivate the diplomatic capital the Biden administration needs to secure European support for joint action against Russia and China.

The Biden administration also is moving to expand sanctions targeting corruption and human-rights abusers.

Deputy Treasury Secretary Adewale Adeyemo, who is leading the sanctions review, has held a series of meetings with representatives from multinational businesses, banks, and nongovernmental organizations as he ”seeks to identify ways to promote a warranted, strategic, and judicious use of sanctions,” his office said. Mr. Adewale hasn’t yet signed off on a final version of the strategy document, an official said.

Among those he has met with on his listening tour include human-rights groups, humanitarian NGOs, trade groups, small businesses and banks.

The administration eased restrictions to facilitate Covid-19 aid to Venezuela. A vaccination site in the country in April.

The administration eased restrictions to facilitate Covid-19 aid to Venezuela. A vaccination site in the country in April.

Photo: Matias Delacroix/Associated Press

The Treasury Department in early February loosened restrictions on Venezuela’s port authority, paving the way for additional shipments of food, agricultural commodities, medicines and other supplies. However, the administration in June said broader sanctions relief would require major concessions from the Maduro government.

Last month, the administration also issued new waivers meant to spur the flow of pandemic-related aid to Venezuela, Syria and Iran, addressing a key concern among humanitarian groups that said U.S. sanction regimes were inadvertently hurting local communities.

Write to Ian Talley at ian.talley@wsj.com