US Tariffs on Iran: Trump's new gambit: 25% tariffs on countries trading with Iran, with India at risk of a total of 75%

US President Donald Trump has announced a significant economic policy targeting countries that engage in trade with Iran, while in a post on Truth Social on Monday night, Trump stated that any country trading with Iran would face an additional 25% tariff on its trade with the United States. This decision is set to take effect immediately, although the White House has not yet released official documentation regarding this new tariff. The move is designed to intensify economic pressure on Iran, particularly as the nation grapples with widespread anti-government protests.

Context of Iran's Anti-Government Protests and US Response

This tariff announcement comes at a critical juncture for Iran, where anti-government protests have been ongoing and have turned violent. Reports indicate that over 600 people have been killed in these demonstrations, creating a volatile political climate within the country. The United States has already imposed stringent economic sanctions on Iran, and this new tariff appears to be an effort to further tighten those restrictions. Trump had previously stated on Sunday night that the Iranian government was crossing a 'red. Line' in its efforts to suppress the protests and that the US was considering 'tough options. ' He also mentioned that Iran had contacted the US to propose talks, but given the escalating death toll and ongoing arrests, the US might have to act first.

Impact on Key Trading Partners

According to a Reuters report, China, the United Arab Emirates (UAE), and India are among Iran's primary trading partners. For these nations, the new tariff directly implies an adverse impact on their trade relations with the United States. If these countries continue to trade with Iran, they will incur an additional 25% cost to sell their goods in the American market, thereby reducing their competitiveness. This measure could Notably alter global trade dynamics, compelling these nations to re-evaluate their trade strategies and potentially seek alternative markets or suppliers.

Potential Additional Burden on India

For India, this announcement is particularly concerning. The United States has already imposed a total of 50% tariffs on India, comprising a. 25% reciprocal tariff and an additional 25% tariff related to India's oil imports from Russia. If this new 25% tariff on trade with Iran is also applied to India, the cumulative tariff could reach 75%. Such a high tariff would present severe challenges for India in selling its goods in the US market, directly impacting India's exports. Trade deal negotiations between the two countries are scheduled to address these tariff disputes. India is seeking a reduction of the existing 50% tariffs to 15% and a complete elimination of the additional 25% penalty imposed for purchasing crude oil from Russia. The new tariff adds another layer of complexity to these ongoing discussions.

Iran's Global Trade Landscape

Based on available World Bank data from 2022, Iran's largest trading partners were China, the UAE, and India. Despite US sanctions, Iran has managed to sustain its trade through Asian and Gulf countries. In 2022, Iran's total trade amounted to approximately $140 billion, with exports reaching $80. 9 billion and imports around $58, while 7 billion. The largest share of Iran's exports consists of crude oil, petroleum products, and natural gas. Also, petrochemicals, steel, copper, agricultural products, and minerals are also exported, while iran primarily imports machinery, electronic equipment, industrial raw materials, and pharmaceuticals. This strong trade network has been crucial in sustaining Iran's economy despite persistent international sanctions.

Protests Against Supreme Leader Khamenei in Iran

Protests against the government and Supreme Leader Ayatollah Khamenei in Iran have entered their 17th day, while these demonstrations, initially sparked by economic hardship, have evolved into a broader movement challenging the ruling establishment. The Norway-based non-governmental organization Iran Human Rights (IHR) has confirmed that at least 648 people have been killed in the violent crackdown on these protests, including nine minors. Also, thousands have been injured, and a large number of arrests have been made. These protests have raised concerns both within and outside Iran, and the US. Tariff announcement will likely intensify external pressure on Iran amidst its internal turmoil.

A Long History of US Sanctions on Iran

The United States began imposing sanctions on Iran in 1979, the year of the Islamic Revolution and the hostage crisis at the US embassy in Tehran, where 52 American citizens were held captive. Since then, over approximately 45 years, the US has implemented various types of sanctions against Iran, while these sanctions have aimed to curb Iran's nuclear program, address its human rights record, and counter its activities that contribute to regional instability. The Trump administration's latest tariff is another chapter in this long series of efforts to pressure Iran, and it could have far-reaching implications for global trade and geopolitics. The response from Iran and its trading partners to this new challenge remains to be seen.