Can Trump Deliver His Promised ‘Economic D-Day’ Against Iran?

SPEAKER_1 (0:00)

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Luke Vargas (0:33)

Nearly six months into the war, President Trump promises a crushing economic operation to isolate Iran, plus packaged food giants head to the lab as users of weight loss drugs say no to once-beloved foods, and why Google is paying millions for a defunct airline's old emails and payroll files.

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Luke Vargas (1:03)

It's Thursday, August 20th. I'm Luke Vargas for The Wall Street Journal, and here is the AM Edition of What's News, the top headlines and business stories moving your world today.

President Trump is threatening to unleash what he's calling economic D-Day against Iran, and warning that any other country that does business with it would face tremendous economic consequences. Trump didn't name names, but said that countries engaged in practices like smuggling oil or helping Iran with cash transfers, quote, know who you are. That warning comes on the heels of the United Arab Emirates, announcing it would suspend financial and economic transactions with Iran in response to weeks of pressure from the US. Journal of Foreign Correspondent Georgi Kantchev says Iran has relied on the UAE and Dubai in particular as a key part of its efforts to remain connected to the global economy in spite of years of Western sanctions and that actually severing those ties won't be easy.

Georgi Kantchev (2:07)

These links are going back decades. These links that are deliberately obscured. There's been all kinds of payments going through various shell companies that are not even based in the UAE but go through the UAE.

These things have moved to exchange houses that are private and difficult to police, quite often without any Iranian names or even direct links appearing in any transaction. So the challenge is immense. At the same time, Dubai is known as a global hub for commerce where everyone is welcome for capital moving in and out. So then Iran is cracking down on Dubai, also potentially would hurt Dubai's kind of business model and positioning and brand in the world. So from that point of view, there's a lot of challenges.

Luke Vargas (2:49)

And Georgi said that Trump's broader push to squeeze Iran faces a raft of other hurdles, including Russia's continued support for Tehran and Chinese refining of its oil.

Georgi Kantchev (2:59)

For all these reasons, it's difficult to imagine that President Trump can command those countries and other countries that are supporting Iran to just completely sever all relations. That would be challenging. Also, not to forget, of course, Iranian oil is a big part of the global market, is mostly curbed, exports are not flowing. But at some point, that's also a factor that needs to be considered for global oil balances.

Do you replace Iranian oil? How can you replace Iranian oil? What happens with those volumes, which also has an impact on global prices too?

Luke Vargas (3:33)

The UAE didn't respond to a request for comment in an administration official said the US sanctions and blockade have crippled Iran's economy and that Trump has more levers to pull.

We are reporting that the Trump administration is likely to lower tariffs on a number of Canadian imports as the countries work toward a new trade agreement. That includes decreasing top line tariffs on steel and aluminum from 50 to 25 percent and on automobiles from 25 to 15 percent. Neither the office of the US. Trade Representative or the Commerce Department provided comments. The news comes after Trump paused additional 50 percent levies on some $20 billion worth of Canadian goods for three days while negotiations continued. Speaking to reporters yesterday, Trump said that Canadian tariffs on US agricultural goods would also be removed in the deal.

SPEAKER_5 (4:25)

Farmers have been hurt very badly by Canada and they won't be paying any tariffs anymore.

And we may bring some of the tariffs down to a level where other countries are, because Canada was paying a higher tariff, Canada was paying us a higher tariff. So we are, look, we have a very nice relationship with leadership right now. And we'll see.