Trump’s threat of tariffs spells failure of sanctions on Iran

President Donald Trump's threat of tariffs against numerous countries has set off a global market freakout, but missing from his aggressive rhetoric is his trademark mention of sanctions.

News ID: 5936

Date: 05 February 2025 - 09:13

TABNAK, Feb 05: This signals the failure of sanctions as a means of coercion and a warfare tool which the United States has used since the end of the Cold War against various foes, most notably Iran.

“The US government's focus on trade tariffs is another sign of the failure of the country's sanctions policy and the futility of repeating maximum pressure against Iran,” Minister of Economy Abdolnaser Hemmati wrote on Tuesday.

Hemmati touched on Canadian Foreign Minister Mélanie Joly’s threat to stop shipping oil to the US at a discount if Trump makes good on his pledge to impose levies of 25 per cent on her country’s imports.

“With Canada threatening not to sell oil to the US due to a 25% tariff imposed on Canadian goods as of yesterday, the lifting of Iran oil sanctions is now more economically important than ever,” he wrote.

In May 2018, Trump’s banner year for sanctions, he withdrew the US from the Iran nuclear deal and unilaterally reimposed all sanctions on Tehran under the tagline of “maximum pressure”. While Iran’s economy tottered, the sanctions failed to achieve their goals.

During his campaign trail, Trump told an event in New York in September that if elected, he would use sanctions as little as possible because using sanctions ultimately “kills your dollar and it kills everything the dollar represents”.

“Look, you’re losing Iran. You’re losing Russia. China is out there trying to get their currency to be the dominant currency, as you know better than anybody,” he said.

Last year, the Wall Street Journal reported that sanctions against Iran had cost the US as much as $175.3 billion in lost export opportunities over 18 years.

As said before, sanctions are a tool of economic and diplomatic coercion, much in the same way as Trump is wielding tariffs, but they have far-reaching consequences by reshaping international politics and economics and alliances.

During his first term in office, President Trump imposed more than 5,000 sanctions. His successor Joe Bien, while indicating to potentially scale them back, ended up intensifying them. According to the Washington Post, the Biden administration added more than 7000 sanctions to the US total.

In fact, each 21st-century American president has imposed more sanctions than the last, despite high-level warnings that addiction to them could have dire consequences.

US Treasury Secretary Jack Lew under the Obama administration famously warned that the “overuse of sanctions” could herald the demise of the dollar. Biden’s treasury secretary Janet Yellen said that US financial sanctions had pushed more countries to seek alternative financial transaction methods not involving the dollar.

This is because the world is finally fed up with the US abusing its dollar hegemony to shift domestic crises and harvest global wealth by damaging the economic and financial stability and well-being of other countries.

The US administration’s application of direct and secondary sanctions increases the risks of holding assets or invoice transactions in dollars, affecting firms located in third countries due to the extra-territoriality of the US law.

This spurs targeted countries and third parties to diversify away from the US dollar for international payments.

A 2022 research study found that the share of the US dollar in foreign exchange reserves of central banks was 59% in 2021 compared to 71% in 1999. The decline, they argued, was at least in part a result of the continued imposition of financial sanctions by the US.

Ironically, the Ukraine war which the US and European governments have been inflaming through a constant flow of arms is accelerating the collapse of the dollar, explaining why Trump is pushing for an "immediate ceasefire" and end to the conflict, no matter what.

Western sanctions on Russia have enabled Beijing to test plans long in development to replace the dollar with the yuan for cross-border trade at scale. And Russia has been more than willing to conduct trade in yuan and establish the financial infrastructure to support yuan transactions with third parties.

Iran has joined the bandwagon along other countries, actively promoting local currency settlements and multilateral cooperation and offering alternative choices and possibilities for the global financial order.

But more significantly, de-dollarization is advocated by the BRICS, an intergovernmental organization founded by Brazil, Russia, India, China and South Africa, with Egypt, Ethiopia, Iran and the United Arab Emirates joining in 2024.

On Thursday, Trump reiterated his threat of 100% tariffs against BRICS nations, warning them against replacing the US dollar as a reserve currency.

The Kremlin in December said that any US attempt to compel countries to use the dollar would backfire, after Trump made the same threat against the BRICS.