Global markets were rattled on Monday after President Donald Trump issued a “final and conclusive” order imposing a 25% tariff on any country trading with Iran. The directive, announced on Truth Social, represents a significant escalation in U.S. trade policy, effectively weaponizing market access to achieve foreign policy goals. By targeting third-party nations—most notably China, India, and the UAE—Trump is expanding the scope of U.S. sanctions enforcement to a global level. The lack of immediate administrative details or legal citations has created a cloud of uncertainty, as businesses and governments try to understand the mechanics of how such a broad tariff will be implemented and enforced against major economies.
The backdrop to this economic shock is the deteriorating situation in Iran, where the government is facing its most serious internal challenge in decades. Mass protests calling for the end of the Islamic Republic have been met with deadly force, with NGOs estimating over 600 deaths. The regime’s response has included cutting off the internet to stifle dissent and hide the bloodshed, a tactic that has drawn international condemnation. Trump’s tariffs are framed as a response to this situation, a way to punish the regime and its enablers. However, the broad application of the tariffs means that U.S. allies and trade partners are effectively being punished for their energy and trade needs, complicating diplomatic relations across the board.
China’s furious reaction underscores the geopolitical stakes. Beijing has denounced the tariffs as unilateral bullying and has vowed to protect its companies from what it views as “long-arm jurisdiction.” This sets the stage for a potential trade war that could drag down global growth. Yet, the Trump administration appears undeterred, viewing the economic pressure as a necessary tool to confront Iran. The White House has maintained a tough rhetoric, with spokespeople hinting at potential military options while simultaneously engaging in back-channel diplomacy. The mixed signals—threatening airstrikes one day and tariffs the next—are part of a “maximum pressure” strategy 2.0, designed to keep Tehran guessing.
Inside Iran, the economic pressure is likely to exacerbate the very grievances driving the protests. The country’s economy, already battered by years of sanctions, relies heavily on exports to a few key partners. If these partners reduce trade to avoid U.S. tariffs, the Iranian Rial could collapse further, fueling more unrest. The regime has tried to project stability through state-organized rallies, but the evacuation of French diplomats tells a different story. The international community is preparing for instability, and Trump’s tariffs are accelerating the isolation of the Iranian market.
As the U.S. Supreme Court reviews the legality of Trump’s previous trade actions, this new order tests the boundaries of presidential power. It forces a confrontation not just with Iran, but with the global trading system. American importers will face higher costs, and consumers may see price hikes, but for the President, these are acceptable costs in a high-stakes geopolitical struggle. The world now waits to see if major powers like China will comply with the U.S. demand or retaliate, potentially sparking a wider economic conflict.