On 12 January 2026, U.S. President Donald Trump announced, “Effective immediately, any Country doing business with the Islamic Republic of Iran will pay a Tariff of 25% on any and all business being done with the United States of America.”
Trump’s announcement aims to weaken the government of the Islamic Republic in the wake of weeks of protests against the government, sparked by a weak economy. Trump told the protesters to keep fighting their government and that “help is on the way.”
Who is “doing business” with Iran, and what can they do in response to the Trump tariffs?
China is Iran’s top trade partner and buys 89% of Iran’s oil. As of October 2025, China bought USD14.5 billion of goods.
Trump’s move likely shocked to Chinese leader Xi Jinping, who probably thought he and Trump made a trade truce in October 2025 that reduced tariffs on China from 57 percent to 47 percent. China paused export controls on rare earth elements (REEs) for one year and agreed to buy more U.S. farm products. Trump was optimistic Xi would work to stop the flow of fentanyl precursors to Mexico.
In response, China may stop U.S. farm product imports and exports of rare earth elements. That means Trump would head into the 2026 mid-term elections with depressed farm incomes (the farm states are key to his electoral base) and the possibility of automobile plant shutdowns if rare earth magnets, available only from China, are not available. (In May 2025, Ford Motor Company temporarily halted some production at its Chicago assembly plant because of a rare-earth magnet shortage tied to Chinese export controls.)
Aircraft maker Boeing is negotiating the sale of 500 commercial aircraft to China’s airlines, but China may pressure the U.S. by pausing a final decision or buying more Airbus aircraft.
Iraq is next at USD10.5 billion in imports from Iran. Iran’s exports are varied: food products, building materials, petrochemicals, home appliances, and natural gas. Due to U.S. pressure, Iraq suspended imports of Iranian natural gas, causing a loss of 30 to 40 percent of Iraq’s power generation needs, and which will reduce Iraq’s future trade with Iran.
Iraq is still negotiating the shape of its new government and groups affiliated with armed wings, some friendly to Iran, won more than 100 of the 165 seats needed to form a government, according to the Associated Press. If Trump’s move is framed as interference in Iraq’s weak economy that may boost the fortunes of more militant politicians and of Iran.
The United Arab Emirates (UAE) recently imported USD7.5 billion in Iranian goods. The UAE is a member in Trump’s Abraham Accords and is a security partner of Washington. It is also a major customer of Boeing and U.S. defense contractors. In November 2025, Emirates Airlines placed a USD38 billion order with Boeing, and FlyDubai placed a USD13 billion order.
The UAE won’t halt security cooperation with the U.S. but some public visits from the Airbus sales team may hit Boeing’s stock price and send its lobbyists running to the White House.
Turkey, a NATO ally, is fourth with USD7.3 billion in trade, and in September 2025 Turkish Airlines announced “it would order 75 Boeing 787 aircraft and had completed negotiations to buy 150 737 MAX planes” from Boeing. Turkey’s president, Recep Tayyip Erdo?an, is as hot-tempered as Trump and Turkey can’t seriously retaliate as it has a weak economy, but the airline may decide to pause the 787 buy pending the final report of the Indian Aircraft Accident Investigation Authority review of the probable cause of the crash of Air India flight 171, a Boeing 787, a process that may take two years.
Afghanistan is fifth with USD2.5 billion in Iran trade. The Taliban government recently signaled interest in renewed relations with the U.S. so it may take the new tariff as its answer from Washington.
Pakistan’s trade with Iran is $2.4 billion a year. Islamabad may send Trump’s new best friend, Field Marshal Asim Munir, Chief of the Army Staff, to Washington to seek relief by reminding Trump of Pakistan’s partnership with the Trump family controlled crypto venture, World Liberty Financial.
Andrew Korybko notes that Pakistan may benefit from the tariff if pressure on Iran causes Afghanistan to approach Pakistan to help facilitate trade via an alternative route. Islamabad can then demand Kabul stop actions against Pakistan by the Tehreek-e-Taliban Pakistan (TTP) and the separatists of the Baloch Liberation Army (BLA). Pakistan may also pile on a demand the ruling Taliban guarantee the security so the Uzbekistan-Afghanistan-Pakistan railway that will being Central Asian goods to Karachi port.
If Pakistan can convince Trump it forced the Taliban to bring the TTP and the BLA to heel, Prime Minister Sharif and Field Marshall Munir will be honored guests in the Oval Office. And Islamabad’s tock will rise in Uzbekistan, where President Shavkat Mirziyoyev has personally advocated for the trans-Afghanistan railway project.
Oman does USD1.8 billion trade with Iran, but the Muscat government is a key diplomatic intermediary for Washington in the Middle East. Muscat can’t do much to retaliate but the tariffs will absorb the time of the leadership that could be better spent on diplomacy and will show the region how Washington treats its friends.
India’s trade with Iran is USD1.7 billion. As of October 2025, India is America’s #11 trade partner, and total India-U.S. trade was reaching USD131.8 billion in FY 2024–25. Until the recent Trump tariff, India’s U.S. tariff was 50% as opposed to 47% for China so Delhi may decide to continue working with Beijing to improve relations until Washington presents a kinder face to the world’s biggest democracy.
India is negotiating with the U.S. about extending a U.S. sanctions waiver for the use of Iran’s Chabahar port on the Gulf of Oman. India has committed USD370 million for the project and feels “exiting Chabahar is not an option.” New Delhi is seeking a “middle?path” arrangement with Washington to protect its strategic interests while addressing Washington’s concerns. The port is crucial for India’s access to Afghanistan and Central Asia without relying on Pakistan.
Russia does USD1.2 billion in trade with Iran, though the real number is likely higher. Russian leader Vladimir Putin won’t care.
Last is Turkmenistan, a place most Americans don’t know of even though it has the world’s fifth-largest gas reserves. The Central Asia republic shares a 1,000 kilometer border with Iran, and the countries plan to increase annual trade to USD3 billion.
Turkmenistan is overly-reliant on its natural gas exports to China and penalizing it for trading with a neighbor will only increase its reliance on China, a strange objective for an American policy.
The remaining Central Asia republics, Kazakhstan, Uzbekistan, the Kyrgyz Republic, and Tajikistan are actively strengthening economic ties with Iran, especially through transport corridors and new trade agreements.
Trump got on famously with Uzbek president, Shavkat Mirziyoyev, during a recent visit and invited Mirziyoyev and Kazakh president, Kassym-Jomart Tokayev, to be his guests at the 2026 G20 Miami summit. That’s all well and good, but Mirziyoyev and Tokayev will keep a weather eye on the U.S. to gauge the effects of sudden policy shifts.
As the targets of the tariffs calibrate their responses, Xi has a strong hand and can get Trump’s attention by halting entry of vegetable products (USD20.5 billion in 2023) and slowing the export of REEs, with no distinction between military or commercial end-users. Other countries can pause deliveries of Boeing aircraft pending India’s completed investigation of Air India flight 171 crash.
By James Durso for Oilprice.com
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