TRUMP’S TAX HITS IRAQ’S ECONOMY HARD… 3 URGENTLY NEEDED COURSES OF ACTION
International Economics Professor Nawar Al-Saadi explained on Wednesday that the tariffs imposed by US President Donald Trump on Iraq will have a compounding impact on the domestic economy. While he expected this move to be the beginning of a restructuring of the trade relationship between Washington and Baghdad, he called for swift action in three directions following this decision.
Al-Saadi told Shafaq News Agency, “The impact of this decision on the Iraqi domestic economy will be complex. On the one hand, the few Iraqi exporters who export their products to the US market will be harmed, even if the total quantities are limited. However, the most dangerous message here is that Iraq does not yet have a diverse or strong export base that allows it to negotiate or maneuver.”
He explained that “local production that can compete in foreign markets is still minimal, and Iraqi exports still rely on oil for more than 90% of the country’s exports. This means that any restrictions on non-oil exports, even if they are imposed by one party, reveal the weakness of the entire economic structure.”
On the international level, Al-Saadi pointed out that “the decision affects Iraq’s reputation in international markets, as the imposition of such fees is not only for purely commercial reasons, but is usually linked to political considerations or US assessments of Iraq’s commitment to trade standards, its regional role, or even its position on US sanctions against parties such as Iran or Russia.”
He added, “In other words, this step could be the beginning of a broader tightening or redrawing of the trade relationship between Washington and Baghdad within a broader political framework. Hence, the repercussions of the decision could extend to Iraq’s relations with other partners, both in the West and in the region.”
Accordingly, Al-Saadi believes that “Iraq needs to take swift action in three directions: first, through a direct diplomatic channel with Washington, to clarify the negative impacts of the decision and work to either exempt certain goods, reduce the percentage, or postpone implementation.”
The second approach, according to Al-Saadi, is “through diversifying trade partnerships and expanding the export base to alternative markets, such as China, India, Turkey, and even the Gulf states.” He explained that “this step requires reforming industrial policies and direct support for local products to qualify for export.”
The third approach is “through building a clear national trade policy based on protecting Iraq’s economic interests, working to reduce dependence on any international party, and activating bilateral and regional trade agreements, especially since Iraq currently suffers from the absence of an effective trade policy that reflects its interests in foreign negotiations.”
The international economics professor concluded his remarks by saying, “This decision should be an opportunity for Iraq to review its economic reality and understand that an economy dependent on oil alone cannot withstand international transformations or political tensions for long, and that building a diversified, productive economy is not a luxury but an urgent necessity.”
Earlier today, US President Donald Trump announced the imposition of 30% tariffs on Iraq, Algeria, and Libya.
According to Reuters, Trump issued a series of letters regarding the imposition of tariffs on six countries, including Algeria, Brunei, Iraq, Libya, Moldova, and the Philippines.
The letters call for imposing tariffs of 30% on Algeria, 25% on Brunei, 30% on Iraq, 30% on Libya, 25% on Moldova, and 25% on the Philippines.