Trump’s Tariff Threat on Iran Raises Stakes Abroad and Risks Blowback at Home

BY EMMANUEL OGBONNA

President Donald Trump has once again turned to tariffs as his preferred instrument of pressure on the global stage, announcing a sweeping new plan aimed at forcing Iran’s leadership to halt its violent crackdown on nationwide protests. The proposal, unveiled in a social media post on Monday, would impose a 25% tax on imports into the United States from any country that continues to do business with Iran.

The move is designed to tighten Iran’s economic isolation at a moment of extreme internal strain. The Islamic Republic is grappling with persistent unrest fueled by economic hardship, political repression and soaring prices. Inflation in Iran is running above 40%, and activists say the death toll from the latest wave of protests has climbed past 2,500 as security forces move aggressively to suppress dissent.

By targeting Iran’s trading partners rather than Iran directly, Trump is attempting to choke off the country’s access to foreign goods and hard currency. Higher costs and reduced availability of imports would likely worsen living conditions for ordinary Iranians, increasing pressure on a government already facing deep public anger.

Yet the strategy also carries significant risks for the United States and the global economy. The proposed tariffs could drive up prices for American consumers by making imports from Iran’s trading partners more expensive. Products ranging from Turkish textiles to Indian gemstones could be caught in the crossfire. The policy also threatens to destabilize fragile trade relationships Washington has spent months trying to stabilize, most notably with China.

The White House has provided few details about how the new tariffs would be implemented. It remains unclear whether the 25% levy would be added on top of the broad, double-digit tariffs Trump imposed last year on imports from most countries, or whether certain goods, such as energy products, would be exempted as they have been in past sanctions regimes. The administration has also not specified the precise legal authority it would use to impose the new measures.

Last year, Trump relied on the 1977 International Emergency Economic Powers Act to justify some of the most expansive tariffs in modern U.S. history. That decision is now under scrutiny, with businesses and several states arguing in court that the president exceeded his authority. The Supreme Court is currently considering the case, a ruling that could invalidate the tariffs and potentially force the government to refund billions of dollars to U.S. importers.

Iran, despite decades of sanctions aimed at curbing its nuclear ambitions, remains an active participant in global trade. In 2024, it conducted nearly $125 billion in international commerce, according to World Trade Organization data. China was its largest trading partner, accounting for roughly $32 billion, followed by the United Arab Emirates at $28 billion and Turkey at $17 billion. Iran also imported more than $6 billion worth of goods from the European Union, with energy dominating its exports and items such as gold, grain and smartphones among its top imports.

China’s central role in Iran’s economy makes it particularly vulnerable to Trump’s proposed tariffs. Beijing is estimated to buy between 80% and 90% of the oil Iran exports, making any U.S. penalties on Chinese goods tied to Iran especially consequential. Such a move could unravel the uneasy trade truce Washington and Beijing reached late last year after months of escalation that briefly threatened to sever commerce between the world’s two largest economies.

That truce followed a period in which both sides imposed triple-digit tariffs, rattling global markets and disrupting supply chains. The agreement reached in October eased some tariffs, restored Chinese purchases of American agricultural products and loosened restrictions on exports of rare-earth materials critical to advanced manufacturing and defense technologies.

Trade experts warn that Trump’s latest threat puts that fragile détente at risk. Wendy Cutler, a former U.S. trade negotiator now at the Asia Society Policy Institute, said the mere prospect of new tariffs linked to Iran undermines already thin trust between Washington and Beijing. Even if the tariffs are never fully implemented, she argued, the signal alone damages confidence and increases the likelihood of retaliation.

Chinese officials have made clear they would respond in kind. Beijing reiterated this week that it views tariff wars as mutually destructive and vowed to defend its economic interests. Analysts in China say any additional U.S. duties would almost certainly be met with equivalent measures.

China, for its part, has spent recent years reducing its reliance on the U.S. market. As trade tensions with Washington have risen, Chinese companies have expanded exports to Europe, Southeast Asia and other regions. Despite a decline in shipments to the United States, China’s overall trade surplus surged to a record nearly $1.2 trillion in 2025, underscoring its growing diversification.

India is also watching the situation closely, though for different reasons. Its direct trade with Iran has shrunk dramatically since it stopped importing Iranian oil in 2020. In 2024, India exported about $1.6 billion worth of goods to Iran, a small fraction of the $129 billion in goods and services it sold to the United States. Still, New Delhi is concerned that further U.S. tariffs could jeopardize its access to the American market, especially as it already faces steep penalties tied to its purchases of Russian oil.

Economists in India say sectors such as textiles, garments, gems, jewelry and engineering goods could be especially exposed. There is also concern that heightened U.S. pressure could complicate India’s strategic investments in Iran, including the Chabahar port, a key project that provides India with a trade corridor to Afghanistan, Central Asia and Europe while bypassing Pakistan.

Some analysts question whether the tariff threat will achieve its stated goal of changing Iran’s behavior. Adnan Mazarei, a former senior official at the International Monetary Fund and now with the Peterson Institute for International Economics, expressed skepticism that economic pressure of this kind would persuade Tehran to ease its crackdown.

In his view, Iran’s leadership has repeatedly shown a willingness to absorb severe economic pain and international isolation to maintain power. While the new tariffs could deepen Iran’s economic suffering and ripple through global trade, Mazarei said, they are unlikely on their own to alter the calculations of a regime determined to suppress dissent at almost any cost.