Trump pressures Iran with tariffs that could raise prices in the US

President Trump has unveiled a new plan to pressure Iran by imposing a 25% tariff on imports from countries that conduct business with the Islamic Republic. The announcement comes as Iran’s government continues its violent suppression of nationwide protests, which activists report have now claimed over 2,000 lives.

The tariffs are designed to further isolate Iran economically and potentially exacerbate the country’s already severe economic challenges. With inflation in Iran exceeding 40%, any additional constraints on foreign trade could significantly impact the availability and price of goods, potentially fueling further domestic unrest.

However, the proposed tariffs create a complex diplomatic and economic situation that extends far beyond Iran. Despite years of international sanctions targeting its nuclear program, Iran maintained nearly $125 billion in international trade last year. China remains Iran’s largest trading partner at $32 billion, followed by the United Arab Emirates at $28 billion and Turkey at $17 billion. Iran also conducts substantial business with the European Union, Russia, and India.

Energy exports dominate Iran’s international trade, while its primary imports include gold, grain, and smartphones. By targeting these trade relationships, Trump’s tariffs could disrupt not only Iran’s economy but also the economies of several U.S. allies and major global powers.

The administration has provided few details about implementation, raising questions about whether these new tariffs would stack on top of existing levies imposed last year on imports from numerous countries. There is also uncertainty about potential exemptions for energy imports, which have been granted in previous tariff actions.

The legal foundation for the tariffs also remains unclear. Trump previously invoked the 1977 International Emergency Economic Powers Act to justify sweeping tariff actions, but that authority is currently being challenged in a Supreme Court case. If the Court rules against the administration, Trump could be forced to rescind the tariffs and refund payments to U.S. importers.

Perhaps most significantly, the proposed tariffs threaten to unravel the fragile trade truce Trump reached with China last October. That agreement had calmed financial markets after both nations had imposed triple-digit tariffs on each other’s goods earlier in the year, threatening to sever trade between the world’s two largest economies.

“President Trump’s threat to increase tariffs by 25% against China and other trading partners due to developments in Iran underscores just how fragile the U.S.-China trade truce is,” said Wendy Cutler, former U.S. trade negotiator and current senior vice president at the Asia Society Policy Institute. “Even if he does not actually implement the tariff hike, damage has already been done. This threat erodes trust between the U.S. and China which is already at a low level.”

Experts question whether the tariffs will achieve their stated objective of pressuring Iran to end its crackdown on protesters. Adnan Mazarei, a nonresident senior fellow at the Peterson Institute for International Economics and former deputy director of the International Monetary Fund, expressed doubt about the strategy’s effectiveness.

“I do not think this is going to be very successful,” Mazarei said. “They will not for this alone change their views or their practices. It is a repressive regime, and it is willing to pay a high cost in terms of people’s blood to stay in power.”

The proposed tariffs highlight the Trump administration’s continued preference for economic pressure as a primary foreign policy tool. However, the potential for unintended economic consequences and diplomatic fallout with key trading partners raises questions about the long-term effectiveness of this approach, especially when dealing with authoritarian regimes that have demonstrated a willingness to endure significant economic hardship to maintain political control.