Trump increases tariffs on Iran, potentially leading to higher prices in the United States

Trump Leverages Tariffs in Bid to Pressure Iran

WASHINGTON (AP) — President Donald Trump has once again turned to tariffs as a diplomatic tool, this time aiming to pressure Iran into halting its violent suppression of widespread protests.

On Monday, Trump announced via social media his intention to impose a 25% tariff on goods imported into the United States from any nation that maintains trade relations with Iran. These sanctions are expected to further strain Iran’s economy by limiting its access to foreign products and increasing consumer prices, which could exacerbate unrest in a country already grappling with inflation rates above 40%.

However, these tariffs may also have negative repercussions for the United States. American consumers could see higher prices on imports from countries that do business with Iran, such as Turkish textiles and Indian gemstones. Additionally, the move could jeopardize the fragile trade agreement Trump secured with China last year.

According to activists, the death toll from the protests in Iran has surpassed 2,000, as the government continues its harsh response to dissent fueled by economic and political grievances.

Details about the new tariffs remain scarce. The White House has not clarified whether these new duties would be added to the substantial tariffs already imposed on most countries last year, nor whether certain energy imports might be exempted as before.

There is also uncertainty regarding the legal foundation for these import taxes. While Trump previously cited the 1977 International Emergency Economic Powers Act to justify broad tariffs, several states and businesses have challenged his authority in court. The Supreme Court is currently reviewing the case, and a ruling could potentially overturn the tariffs and require refunds to affected U.S. importers.

Iran’s Trade Landscape Amid Sanctions

Years of sanctions targeting Iran’s nuclear ambitions have left the nation isolated, yet it still managed nearly $125 billion in international trade in 2024. This includes $32 billion with China, $28 billion with the United Arab Emirates, and $17 billion with Turkey, according to the World Trade Organization.

In the same year, Iran imported over $6 billion in goods from the European Union, while Russia and India also maintain significant trade ties. Iran’s exports are dominated by energy, and its main imports include gold, grain, and smartphones.

Potential Fallout from U.S. Tariffs

Trump’s strategy to pressure Iran could have unintended consequences, particularly for U.S.-China relations. The new tariffs threaten to disrupt the delicate trade truce with China.

Last spring, the U.S. and China imposed steep tariffs on each other, raising fears of a breakdown in trade between the world’s two largest economies and causing turmoil in global markets. The two nations spent much of the year working to ease tensions, eventually reaching an agreement in October that scaled back tariffs, ended China’s ban on American soybeans, and relaxed restrictions on critical exports such as rare-earth minerals and advanced technologies.

Expert Reactions and Global Implications

The proposed tariffs, intended to penalize Iran, would also impact China due to its significant trade with Tehran. “President Trump’s threat to raise tariffs by 25% on China and other trading partners over developments in Iran highlights the fragility of the U.S.-China trade truce,” said Wendy Cutler, a former U.S. trade negotiator and current senior vice president at the Asia Society Policy Institute. “Even without implementation, the threat itself undermines already low levels of trust between the two countries.”

Adnan Mazarei, a nonresident senior fellow at the Peterson Institute for International Economics, expressed skepticism about the effectiveness of the tariffs in changing Iran’s behavior. “I do not believe this approach will succeed,” said Mazarei, a former deputy director at the International Monetary Fund with experience in Middle Eastern crises. “The regime is repressive and willing to pay a steep price, including the loss of lives, to maintain its grip on power.”