Datanomics: US imposes 25% tariff, worsening Iran's economic stress

As the US slaps fresh tariffs on Iran's trading partners, India faces little fallout - but the move underscores Tehran's deepening economic stress under decades of sanctions

Amid the anti-government protests in Iran, partly due to deteriorating economic conditions, United States (US) President Donald Trump has levied a 25 per cent tariff on Iran’s trading partners with immediate effect. The decision is unlikely to impact India because of declining 

India-Iran trade.

 

Conditions deteriorating in Iran

 

Iran had moderate inflation levels and a gross domestic product double-digit growth rate in the 1960s and the early 1970s. After the Islamic Revolution in 1979, inflation has largely remained above 10 per cent, increasing to over 40 per cent after the pandemic. The growth rate has slowed in recent years, and per capita income has nearly halved from $8025 in 2011 to $4074 in 2025, according to IMF projections. This might be largely due to sanctions imposed on the country to varying degrees by the US since the Jimmy Carter regime in 1979.

 

 

60% of India’s exports to Iran is basmati rice

 

Overall, Iran’s share in India’s global exports and imports remained minuscule in FY25 and FY26 (Apr-Nov). However, over 60 per cent of India’s outward shipments to Iran consisted of basmati rice. Iran accounted for 13 per cent of India’s exports of basmati rice globally in FY25. 

 

China and UAE biggest exporters 

 

China and the United Arab Emirates (UAE) were the major exporters to Iran, accounting for half of Iran’s global imports in 2024. India’s share in Iran’s  imports in 2024 was 4.33 per cent.