Trump's Iran tariff: You can't save a society by bankrupting it
Submitted by
Mohammad Reza Farzanegan
on
Fri, 01/16/2026 - 19:13
Washington must realise that you cannot 'rescue' a people by destroying their ability to survive
US President Donald Trump is pictured in Washington on 11 February 2025 (Jim Watson/AFP)
On
On 12 January, as Iran endured tragic loss of life and widespread reports of deadly clashes, Washington chose to speak in the language of economic pressure.
US President Donald Trump’s Truth Social declaration, imposing an “immediate” 25 percent tariff on any nation “doing business” with the Islamic Republic, represents a radical shift from targeting specific firms to punishing entire sovereign economies.
While the White House has framed this as a “final and conclusive” blow to the clerical establishment, an astute evaluation of the drivers and effects reveals a policy that is likely to backfire. By weaponising global trade, Washington is not only risking a domestic legal and financial crisis; it is actively hollowing out the very social group most capable of promoting democratic change - the Iranian middle class.
The timing of this announcement was not accidental. The Trump administration is currently facing a Supreme Court ruling that could strike down its use of the International Emergency Economic Powers Act to impose tariffs. As Trump himself has admitted, a negative ruling would “screw” the US Treasury, potentially forcing a $130bn refund of tariff revenues.
In this context, the new Iran tariff is a desperate assertion of executive power - a “shock and awe” tactic designed to project strength, while the legal ground shifts at home.
But by adding a 25 percent “Iran penalty” on top of existing duties, the US is effectively pushing the tariff rate on Chinese goods towards 72 percent. This is not just a foreign policy tool; it is a massive, regressive tax on American consumers, held hostage to a geopolitical strategy that has historically failed to produce regime change.
The primary economic assumption in Washington is that more pressure equals a faster collapse. Research on Iran’s informal economy, however, suggests the opposite. Trade does not vanish under such pressure; it simply changes hands.
Shadow state
As legitimate corporate entities pull back to protect their US market access, they are replaced by a web of unregulated middlemen and “shadow fleets”. Iran is already transacting in Chinese currency and importing billions in gold to bypass the dollar.
By penalising formal trade, Washington creates a “middleman premium” - a massive transaction cost that drives hyper-inflation for ordinary citizens, while perversely enriching those who control clandestine routes. The shadow state does not suffer under these tariffs; it profits from the scarcity they create.
History shows that when direct trade is blocked, an “alliance of the bullied” emerges. Those with significant trade ties to the US may be forced to reduce official trade with Iran to avoid penalties. Conversely countries with minimal US exposure may step in as intermediaries, absorbing redirected trade.
The result is not the isolation of Iran, but a shifting network of winners and losers that pushes more of the global economy outside the US sphere of influence.
The most devastating effect of the “maximum pressure” policy is one that Washington continues to ignore: the destruction of the Iranian middle class. A recent academic study found that sanctions led to an average annual reduction in the size of the middle class by 12 to 17 percentage points between 2012 and 2019.
The middle class is the traditional engine of reform. When teachers, public-sector professionals, and technicians are pushed into the “vulnerable” category - struggling to afford staples like corn and rice, which make up a third of Iran’s imports - their focus shifts from political mobilisation to basic survival.
By hollowing out this social buffer, the US is inadvertently destroying the very base that President Masoud Pezeshkian’s government, and the protesters on the streets, require for a sustainable democratic transition.
There is a dangerous belief that economic misery leads directly to a coup or regime fall. However, research using Iran as a case study offers a counter-intuitive warning: while sanction intensity increases “civil disorder” and spontaneous protests, it decreases the risk of organised civil war or successful coups.
In a stable autocracy with high repression capacity, extreme external pressure allows the regime to frame internal dissent as “foreign-led sabotage”. By making the 25-percent tariff a global headline, Trump gave Supreme Leader Ayatollah Ali Khamenei a powerful propaganda tool: Iran can now blame 50 percent inflation and crumbling infrastructure not on its own mismanagement, but on a “crusade” by Washington, triggering a rally-around-the-flag effect that preserves the regime’s power.
Stark dependency
The scale of Iran’s medical dependency, meanwhile, is starkly visible in the trade profiles of Europe’s most advanced exporters. In 2023, the Netherlands was a lifeline for the Iranian healthcare system, exporting over $124m in medical instruments and $76.5m in orthopaedic appliances. But by October 2025, total Dutch imports to Iran had plummeted by nearly 45 percent over the previous year.
Germany tells a similar story. In 2023, it exported $97.4m in vaccines and blood products, and $90.5m in packaged medicaments to Iran. By October 2025, German exports had contracted by around 19 percent over the previous year.
When high-tech manufacturers face a 25 percent penalty on their global operations for maintaining an Iranian presence, the commercial risk inevitably outweighs the humanitarian intent.
The health burden begins long before a patient reaches the hospital. Recent figures from Iran Open Data reveal a nutritional crisis of unprecedented proportions: over the past decade, per-capita red meat consumption has plunged by 40 percent, leaving the average Iranian consuming 50 percent less meat than their regional counterparts in Turkey.
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Coupled with a 30 percent drop in dairy consumption since 2010, this protein deficit creates a baseline of malnutrition that weakens immune resilience across the population. In the face of a 25-percent trade shock, besides the well-known domestic mismanagement issue, the cost of imported dietary essentials will likely rise further, turning a nutritional deficit into a chronic public health emergency.
The mental health toll of this economic isolation and mismanagement has reached a breaking point. Official suicide rates in Iran rose by 70 percent between 2011 and 2023, reaching more than seven per 100,000.
In vulnerable border provinces like Ilam, the rate has spiked to 16.8 per 100,000, reflecting a systemic fracture where economic safety nets have eroded under hyper-inflation. The impending tariff shock risks deepening this sense of hopelessness, as the cost of living outpaces the ability of families to survive, let alone thrive.
Perhaps the most overlooked clinical consequence of trade restriction is the acceleration of a “dirty energy revival”. Empirical evidence shows that sanctions systematically lower energy efficiency, and shift energy systems towards carbon-intensive fuels. Restricted from the technology and finance needed for clean energy infrastructure, Iran has increasingly reverted to burning mazut, a high-sulphur fuel oil with sulphur content seven times the international maritime standard.
In the year leading up to March 2025, mazut use in power plants rose by an average of 46 percent, with a staggering 543 percent increase in Bushehr. The resulting surge in sulphur dioxide and fine particulate matter is directly associated with a spike in emergency cardiovascular and respiratory distress in cities like Tehran. By further restricting trade and technology, the proposed tariffs translate directly into deteriorating air quality and a mounting, avoidable burden of respiratory disease.
By undermining access to essential goods, services, and environmental quality, the policy risks increasing public discontent without producing organized political change - consistent with evidence from the Middle East showing that dissatisfaction with amenities and urban infrastructure raises the likelihood of revolt, particularly in large cities.
If this policy is merely a “week-long headline” meant to project strength while avoiding actual military engagement, it is a cynical diplomatic shock. But as a long-term economic strategy, it is a blunt instrument for a sharp crisis.
“Final and conclusive” is easy to type on social media; surviving the fallout of a global trade war and the hollowing out of a nation’s future is the real challenge. Washington must realise that you cannot “rescue” a people by destroying their ability to survive.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Eye.
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