The era of pragmatic trade with Iran could soon be coming to an end. Iran’s top trading partners are bracing for a supply chain shock as they prepare for possible secondary tariffs from the US after US President Donald Trump signed an executive order enabling up to25% tariffs on countries that continue to trade with Iran.

Who’s bracing for impact? “While the US tariff threat introduces uncertainty, Iran’s major diversified export partners — China, UAE, Turkey — are likely more well-positioned to absorb the shock by switching suppliers,” Nasser Saidi, president of UAE-based advisory firm Nasser Saidi and Associates and former Lebanese economic minister, told The National. “The pain will be felt primarily by Iran and Iraq,” he clarified.

Let’s break it down: Iran’s top trade partners were China at USD 14.5 bn, Iraq at USD 10.5 bn, and the UAE at USD 7.5 bn between January and October last year. For operators in the UAE, this is a procurement and lead-time challenge. For those in Iraq, it’s a fundamental threat to the power required to keep businesses running.

What’s next?

The Emirates’ logistics pivot: The UAE is a major importer of Iranian fresh fruit, vegetables, and livestock due to short shipping times. If tariffs are enforced, logistics operators should prepare for a shift toward suppliers in Pakistan, India, or Europe. While this adds miles to the supply chain, the inflationary impact is expected to be contained.

Hold your horses — they’re still weighing pros and cons: “We have to see, is this going to affect the supply of the food products, or some of the products that come from Iran? Is this going to affect the prices on the consumer and how much they’re paying to have the alternative?” UAE Foreign Trade Minister Thani Al Zeyoudi said (watch, runtime: 02:37) last month.

Iraq is set to take the biggest hit. Unlike the UAE, Iraq is logistically tethered to Iran for electricity and gas. Cutting these ties wouldn’t just affect food prices, it could trigger energy blackouts and drive up local operational costs across the board.

Regional players could stand to gain from Iran’s loss: China accounted for over 90% of Iran’s oil exports last October, primarily through independent Chinese refineries. That being said, it would be “relatively simple for China to source [oil] from other trade partners, including from the GCC,” Saidi noted.

We’re on the lookout

Countries may not stay above board when circumventing tariffs. Analysts suggest that squeezed formal trade could trigger an uptick in informal trade routes — small vessels and land crossings moving consumer goods and food off the books. The UAE and Iraq have yet to clarify how these tariffs will affect specific commodity prices or the feasibility of alternative supply routes.

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