New Economic Pressure On Iran, Iran Warns Neighbors, Tariff War With Canada

Treasury Secretary Scott Bessant will lay out the plan today. "There is already a blockade and sanctions. What's left to do? One target country is doing business with Iran."

"I'm Leila Faldil. That's Michelle Martin. And this is up first from NPR News."

Iran is warning its neighbors not to get involved in the U.S.'s economic war. The U.A.E. has already cut off all trade with Iran very little while is getting through the straight-of-armus. Now Iran is saying it could stop oil from leaving the region altogether. And the trade war with Canada is heating up. The U.S. imposed a new 50% tariff after talks broke down. Canada's prime minister says his country will fight back.

Canada will match Washington's new tariff's dollar for dollar.

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President Trump promised a campaign of economic warfare and pledged to go after other countries that extend Iran a lifeline. The U.S. already has extensive sanctions on Iran stretching back nearly five decades. With us as NPR White House correspondent Emily Frank to explain what might be down a line of morning, Emily. Good morning. So there was a new round of U.S. sanctions as recently as June on any entities that helped Iran invade penalties.

This has been an American naval blockade for months, cutting off most goods from the outside and blocking Iranian oil exports. What more can the U.S. actually do? So what the U.S. has not really done yet in which President Trump seemed to suggest and opposed on his social media such true social last week is to put more pressure on countries and their governments who are host to entities that provide cash flow for Iran. And in an editorial published in the Financial Times on Sunday, Treasury Secretary Besson wrote "obligantly of countries which give Iran an economic lifeline

and said they should "consider the consequences of further doing so." Now, one of these countries, which he didn't mention specifically, was the United Arab Emirates. But this month, the UAE said it was cutting off trade with Iran.

The second major country is China, especially the region of Hong Kong, and Besson specifically criticized China last week for buying most of Iran's oil in the past.

“So if the U.S. has had years of sanctions designed to put economic pressure on Iran, what impact have they had?”

All right, I talked to Alan Air about this. He's a longtime American diplomat and he's a former member of the U.S. nuclear negotiating team until 2015. And what it comes to sanctions, we've done the low hanging fruit, the mid-hanging fruit, the hanging fruit, the hanging fruit, the tree, and also there are no new sanctions that are effective. So he's skeptical. This economic sanctions play a book will work in changing the Iranian regime because when he was with the State Department, air says the logic, you know, the argument behind sanctions was this.

If you emissarate enough Iranian people long enough and hard enough, they will put effective political pressure on their own regime to compromise on red lines. That's delicious. That's not going to happen. Instead, he and other analysts I've spoken to have noted this war has actually empowered even more aggressive ideological hardliners. And he believes if there were mass protests to happen again in Iran, Iran's leaders would simply just massacre those demonstrators again. What's they have already done? Right.

“Are there any other cards the U.S. might have to play beyond sanctions that could have leveraged over Iran?”

A big thing would be getting back more control over the Strait of Hormuz and the U.S. Navy is escorting more cargo ships through that channel, but at a really high cost. Both countries, the U.S. and Iran claim control over the Strait, but in reality Iran still has the upper hand and only a fraction of the oil and the ships that used to transfer the Strait is now making its way through.

This term, Trump has tried U.S. military pressure, you know weeks of bombing, but we know that it's not led to regime change and now the administration is saying it's going to try economic pressure again.

That is, and here's Emily Fang, Emily, thank you.

Thanks Michelle. For Iran's reaction to these threats, we're going to turn to NPR's ideal LLT and Istanbul. Good morning to you.

“Good morning. Good morning. So what are Iranian leaders saying?”

Well, just today, the Foreign Ministry's spokesperson called the expected sanctions a form of economic terrorism to punish Iran and then over the weekend Iran's new security chief, Mossen Rizai, gave an interview to state TV and outlined Iran's position. He said Iran would retaliate in a quote, seismic manner to President Trump's economic plans.

Now, Rizai is a hardliner used to be the head of the Revolutionary Guards. He's a military advisor to Iran's current Ayatollum and his main warning was to the Gulf states that surround Iran.

He said that any country, partnering in these new economic restrictions would be considered an enemy and that Iran will target their interests. And as you know, since the war broke out almost six months ago, Iran has targeted U.S. installations in Jordan and Gulf countries like the UAE, Kuwait, Saudi Arabia with drones and missiles, and those attacks have been fatal. How did he say Iran would do this? Well, as I said that Iran would attack oil tankers leaving through the Persian Gulf through alternative routes from the straight of Hormuz.

So that quote, not even a single drop of oil will leave from the region, right now Iran isn't interfering with alternative routes.

So this could be devastating to oil supplies. And Gulf countries are desperate for resolution to this conflict, because they've spent billions to expand pipelines.

Other infrastructure to keep oil exports flowing and not to depend on the straight of Hormuz, which is of course still blockaded by Iran. We are yet to hear any comments from Gulf countries about these new economic sanctions if they support them, reject them what they mean for them.

“So Iran has spent almost half a century weather in U.S. sanctions, and it's ordinary Iranians who bear the brunt of their consequences. What are you hearing from them today?”

Like you said, before the war, the economy in Iran wasn't doing that great already. Double digit inflation, currency devaluation, systemic mismanagement. There were severe supply chain bottlenecks Iranians were forced to rely on illegal black markets to access basic necessities. Today Iran's real currency hit a new record low of 2 million to the dollar in morning trading. We spoke to a 30 year old woman who asked us not to use her name for fear of retaliation from the Iranian government. She said most ordinary Iranians are buying food using a credit system because many don't have enough cash.

Since I am in debt to the grocery store, she says I couldn't even buy tomato paste to cook pasta. She also says that lifesaving medicines like insulin are becoming too expensive to buy that Iranians risk becoming ruined financially if they pay for things like a doctor's visit and IV injections. She told us that meat is almost $5 per pound and just over $11 for a gallon of cooking oil. But daily life has also become more difficult. There's more power cuts. Infrastructure has been hit badly on employment has gone up and the prices of the government subsidized gas has spiked.

“Like we heard, the political unrest that Iranians were protesting earlier in the year were because of how expensive it was in Iran.”

But as Emily mentioned earlier, it's unclear if new pressures run the risk of sparking more protests. So really Michelle for ordinary Iranians already struggling under sky high inflation and these potential new sanctions. It means that an already desperate situation is only getting worse. That is MPRs. How do you? I'll shout to you in Istanbul. How do you all thank you? You're very welcome. The latest active front in the Trump administration's trade war is in Canada.

Last week, President Trump called off new tariffs less than two hours before a deadline saying there was the outline of a deal. Talks broke down Friday and Trump imposed new 50% import taxes on some Canadian products. And Canada is threatening to retaliate. How did this all go south? Look, there's been a lot of friction between the US and Canada ever since President Trump returned to the White House.

Canada's Prime Minister Mark Carney has been outspoken in warning that the US is no longer a reliable economic partner. He says its signature is often written in Pencil. And Carney has brought support from the Canadian public when he vows his country will fight back. Canada will match Washington's new tariffs dollar for dollar in order to protect Canadian workers farmers, families and businesses.

They will raise the cost of Canadian whiskey and hockey sticks. But they don't touch some of Canada's biggest exports like crude oil and fertilizer. That said, this is another big fault line in what has been for decades in mutually beneficial trade relationship.

“Is there a chance that these two neighbors will take a step back from the brink?”

Yeah, there's a chance Canada's retaliatory tariffs don't take effect for a couple of weeks and certainly the business community in the US is hoping the two sides will use that time to reach a negotiated settlement. Both the Chamber of Commerce and the Business Roundtable issued statements this weekend calling on the two sides to get back to the bargaining table. You know, these two economies are tightly interconnected and a breakup would be really disruptive. For right now, though, US trade representative Jamison Greer puts it on Fox News over the weekend. There's nothing in the works.

We don't have new talks planned with the Canadians. We're moving forward with measures that respond to Canadian retaliation. Remember, as President Trump has introduced a trade policy to reshore American production in the product American jobs. Two countries have retaliated against the United States. The people's Republic of China and Canada. The administration acts as if it's surprising that Canada doesn't just surrender to the President's trade war, even though retaliation in this case is about as predictable as Iran's decision to close the straightaway for moves after the US attack.

And look, retaliation can work when China retaliated for Trump's triple digit tariffs last year. It ultimately led to some de-escalation.

“So we'll see if some similar happens here.”

And what is the status of the wider trade war? Well, it's had its ups and downs. The average US tariff on imports from around the world is now a little over 11%. That's about four times what it was when Trump returned to the White House last year. Some of the President's tariffs were struck down by the Supreme Court, and the administration said to pay more than $100 billion in refunds. But they keep adding new tariffs. And as Prime Minister Carney noted this weekend, that means higher cost for US consumers.

Canadian exports to the United States lower costs for American families. Contrast tariffs or taxes, taxes which are ultimately paid by US consumers. The administration has tacitly acknowledged that its trade policies are raising costs for consumers last week. The President announced he was temporarily relaxing tariffs on imported ground beef because, of course, the high cost of hamburger and other things are a big concern for US voters as we approach the midterm elections.

“That is, and here's Scott Horsey, Scott, thank you.”

You're welcome. Before you go, don't forget to listen to the latest episode of Up First Sunday Story. For the past 25 years, a rare Pacific ecosystem has been understurbed. Now, the Trump administration is opening nearby waters to commercial fishing.

The Americans' fishermen have never had a better ally in the White House and Donald Trump.

This week on the Sunday Story, we discuss what's at stake for this wild ecosystem. Listen now to the Sunday Story from the Up First podcast on the NPR app. And that's up first for Monday, August 24th, I'm Michelle Martin. And I'm Leila Falded. Today's episode of Up First was edited by Annie Yucanana, Tina Crya, Emily Cobb. I'm homed up by DC and Taylor Haney.

It was produced by Julie Depp and Brock and Neon Dumas. Our director is Milton Gavada. We get engineering support from Nisha Highness. Our technical director is Carly Strange. Join us again tomorrow. This week on sources and methods 260 days at sea. We're learning more about the conditions aboard the USS Abraham Lincoln,

which President Trump says hasn't been deployed long enough.

I was talking to one retired animal who said, you know, the problem is they didn't plan this.

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