Trump declared ‘economic warfare’ on Iran. What does that mean for Americans?

**SPEAKER_1** (0:01)
WBUR Podcasts, Boston.

**Edward Fishman** (0:10)
So there's really not all that much more for Trump to do. I think probably the one other step you could take would be to impose sanctions on Iran's main trading partners.

**Kalyani Saxena** (0:20)
President Trump is threatening Iran with an economic D-Day.
It's Thursday, August 20th and this is Here & Now Anytime from NPR and WBUR Boston. I'm Kalyani Saxena. Today on the show, we'll get an update on the US-Canada trade talks after Trump held back on putting 50 percent tariffs on Canadian goods.

**Peter Armstrong** (0:53)
We're operating in a bit of a cloud here in which Donald Trump says the deal is done. The Canadian government says talks are ongoing. But here in Canada, we're kind of used to operating in that cloud.

**Kalyani Saxena** (1:03)
But first, President Trump is lobbying a new threat against Iran, warning the country to prepare for, quote, economic warfare and isolation on an unprecedented scale. It comes as Trump tries a new tactic to end a war that he said would last only weeks, but has stretched on for nearly six months. So what would economic warfare look like? Well, Trump says countries that evade the sanctions and help Iran will face severe economic consequences. Meanwhile, it appears Iran is unfazed. The country's foreign minister said on XToday that Trump's threat is just a distraction from the U.S.'s mounting debt and accused the US of economic terrorism.
Rob Schmitz spoke with Edward Fishman, a senior fellow and director at the Council on Foreign Relations about economic warfare and the downstream consequences it could have on Americans and the global economy.

**Rob Schmitz** (2:03)
So as you point out in a recent article for CFR, economic warfare has become more or less normalized over the past few decades, especially during President Trump's two terms in office. What might it look like in the situation with Iran?

**Edward Fishman** (2:17)
So look, Rob, Iran has been comprehensively sanctioned now for over a decade. Americans can't buy anything from Iran. We don't sell anything to Iran. Effectively, all of Iran's banks are fully cut off from the dollar and the international financial system. So really all of the low-hanging fruit has been picked. I might also add that the Trump administration has a naval blockade on Iran. So Iran's own oil exports are not really able to get out to the international marketplace.
So there's really not all that much more for Trump to do. I think probably the one other step he could take would be to impose sanctions on Iran's main trading partners, sanctioning Chinese banks, Chinese energy companies, banks in Dubai, that are helping Iran evade sanctions. I think the challenge with that though is it would certainly court an economic conflict with China, which I think is something Trump will probably want to avoid.

**Rob Schmitz** (3:09)
So what does that mean for Americans? And it sounds like a lot of these measures that the Trump administration wants to take on Iran may not have a big impact on the US economy.

**Edward Fishman** (3:20)
Well, I think a lot depends on how countries like China would retaliate. You know, if China responds to any sanctions on Chinese banks or energy companies with anything like the rare earth mineral export controls that they imposed last year after Trump's Liberation Day tariffs, that could have significant impacts on the American industrial economy. You know, last year, when China imposed those export controls on rare earth minerals, within a few weeks, Ford had to shut down a factory in Chicago that makes its Explorer SUV. So that shows just how potent some of these tools China has can be.
And they are a real risk to American industrial output, as well as people who work at those facilities.

**Rob Schmitz** (3:57)
And for American consumers, that means higher prices, I'm guessing.

**Edward Fishman** (4:00)
Of course. This entire war is inflationary, right? I mean, the closure of the Strait of Hormuz has spiked energy prices, which raises prices for all manner of consumer goods. And then, of course, if you add into that mix, escalating tensions between the US and China, that would just make prices even higher, given how many things we import from China still to this day.

**Rob Schmitz** (4:21)
You know, the World Trade Organization used to be instrumental in solving these trade disputes. And now, of course, it seems to be missing from the process. Obviously, the Trump administration has pulled the US out of the WTO, but it did so because it felt the organization was no longer working as it was intended to.
Talk a little bit about that. What kind of role could the WTO play in this?