The tariffs target Iran’s top trading partners — China, the United Arab Emirates, Turkey, and the European Union — creating a risk of retaliatory escalation that economists say could cost the United States far more than the pressure tactic gains in Tehran.

President Donald Trump announced Monday he would impose a 25% tariff on imports from any country that does business with Iran, seeking to pressure Tehran to end its violent suppression of nationwide protests that have killed more than 2,500 people, according to activists.

The announcement, made via social media, offered few implementation details. The White House had not said whether the new levies would stack atop the double-digit tariffs Trump imposed on nearly every country last year, whether energy imports would be exempted, or what legal authority underpins the measure.

Iran’s economic exposure — and the limits of tariff pressure

Iran conducted nearly $125 billion in international trade in 2024, according to the World Trade Organization, including $32 billion with China, $28 billion with the United Arab Emirates, and $17 billion with Turkey. The European Union supplied more than $6 billion in imports that year. The Iranian economy was already under strain: inflation was running above 40%, making the population particularly vulnerable to further price increases from reduced access to foreign goods.

Adnan Mazarei, a nonresident senior fellow at the Peterson Institute for International Economics and a former deputy director of the International Monetary Fund, said the tariffs were unlikely to change Tehran’s conduct.

“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 China risk

The most consequential risk from the new tariffs may lie in their effect on Washington’s relationship with Beijing. China buys roughly 80 to 90 percent of Iran’s oil exports, according to a 2024 report by the U.S. Energy Information Administration, making it the primary target of any trade penalty aimed at Iran.

Last spring, the United States and China imposed triple-digit tariffs on each other in a confrontation that briefly threatened to sever trade between the world’s two largest economies. The two countries spent months negotiating a truce, reached in October 2025, that reined in tariffs, ended China’s boycott of American soybeans, and eased restrictions on Chinese exports of rare-earth minerals and technologies used in defense and manufacturing. Trump’s Iran tariff announcement directly threatens that agreement.

“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, a former U.S. trade negotiator and 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.”

China’s Foreign Ministry spokesperson Mao Ning said Tuesday that Beijing would defend its interests. “China’s position on tariffs is very clear: there are no winners in a tariff war,” Mao said. “China will firmly safeguard its legitimate rights and interests.”

John Gong, a professor at the University of International Business and Economics in Beijing, said retaliation was likely. “One thing I can guarantee you is that if an extra 25% is slapped on China, China is definitely going to retaliate with another 25% of tariffs,” Gong said.

China’s trade surplus reached nearly $1.2 trillion in 2025 — a record — as Chinese businesses shifted exports away from the United States toward Europe and Southeast Asia, the Chinese government announced Wednesday. That diversification has reduced Beijing’s economic exposure to American market access and, with it, its incentive to avoid a new confrontation.

India caught between two pressures

India faces a different calculation. The country sent $1.6 billion in exports to Iran in 2024 — mainly rice, tea, sugar, pharmaceuticals, and electrical machinery — compared to $129 billion in goods and services sent to the United States that year. India already faces 50% U.S. tariffs imposed as punishment for its purchases of Russian oil.

Abhijit Mukhopadhyay, a senior economist at the Chintan Research Foundation in New Delhi, said Indian concerns centered less on Iran trade than on U.S. market access.

“The impact everybody is thinking about is not in terms of India-Iran trade, which is much smaller, but the impact on India-U.S. trade,” Mukhopadhyay said. “So obviously that market is in danger.”

Textiles and garments, gems and jewelry, and engineering goods faced the greatest exposure, Mukhopadhyay said. He also noted that India’s investment in Iran’s Chabahar port — which provides a trade route to Afghanistan, Central Asia, and Europe that bypasses Pakistan — could be affected.

The Trump administration had not identified the legal basis for the new tariffs. Trump invoked the International Emergency Economic Powers Act of 1977 to justify broad tariff authority last year. That legal basis is now before the Supreme Court, which is weighing challenges from businesses and several states arguing Trump exceeded his statutory power. A ruling against the administration could require refunds to U.S. importers that paid the levies.

The administration had also not clarified whether the Iran-targeted tariffs would be layered on top of existing levies imposed under last year’s sweeping tariff orders.