President Donald Trump’s administration announced proposed secondary tariffs earlier this week as a response to a violent crackdown on protesters in Iran. Analysis suggests these tariffs, while potentially disruptive, may disproportionately impact Iran’s economy rather than its trading partners.
How Secondary Tariffs on Iran Would Work
Trump’s public statements indicate the proposed 25 percent tariff would not be limited to countries purchasing Iranian crude oil. Tehran would likely be forced to lower prices across a wide range of goods to offset the cost of tariffs imposed on buyers’ exports to the United States.
Even if applied only to buyers of Iranian energy and petrochemical products, the impact would be severe. Iran currently exports around 1.3 million barrels per day of crude oil—almost entirely to China. It also exports more than half that volume in refined petroleum products, primarily to the United Arab Emirates, Turkey, Iraq, India, and Pakistan.
Annual revenues from liquefied petroleum gas exceed $10 billion, fuel oil generates roughly $7 billion, and gas exports about $5 billion. Income from these products, including petrochemical shipments, roughly matches Iran’s crude oil earnings.
Tehran Shouldering the Costs
The United Arab Emirates—a major importer of Iranian fuel oil and LPG—maintains extensive economic ties with the United States, making it unlikely to risk exposure to secondary tariffs. Other Asian buyers, including India, Singapore, Malaysia, and Pakistan, import Iranian products in volumes too small to justify jeopardizing access to the US market.
The most likely outcome is that Iran will once again be pushed to rely overwhelmingly on China, offering steep discounts to preserve market share. If implemented, secondary tariffs would narrow Iran’s options, deepen its dependence on a single buyer, and erode its earnings at a moment of domestic and fiscal strain.
What Past Examples Say
A precedent for this approach is the United States’ action against India over its imports of Russian oil in late August of last year. Within months, Russian crude was selling at discounts of up to $20 to $30 per barrel, compared to discounts of around $3 per barrel in summer and $10 in autumn. Despite the discounted price, Russia’s oil exports to India fell by 29 percent in December compared with the previous month.
The pain was absorbed primarily by Russia, not India. US Census Bureau data show that despite the imposition of 25 percent tariffs on Indian goods, India’s exports to the United States did not decline significantly, helped by cheap Russian oil keeping Indian refiners competitive.
China’s experience tells a similar story. While Chinese exports to the United States fell by about 20 percent in 2025 under US tariffs, China’s total global exports grew by 5.5 percent. Supported by discounted Russian oil and gas, Beijing posted a record $1.2 trillion trade surplus.
These cases suggest that secondary tariffs tend to extract concessions from the sanctioned exporter rather than meaningfully penalizing its trading partners.
Iran’s 25-year gas supply contract with Turkey is set to expire in five months, with no indication that Ankara intends to renew it. Gas deliveries to Iraq have also been halted due to domestic shortages, prompting Baghdad to seek alternative suppliers.
The policy may prove more damaging than conventional sanctions—by forcing Iran itself to absorb the cost of maintaining its already limited presence in the global economy.
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