January 30, 2023

Trump’s pullout of Iran peace deal just backfired for American industry

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One of the reasons it took over two years for the U.S. and international allies to negotiate the nuclear pact with Iran was that the Iranians did not believe Americans could be trusted. 


Now that President Trump has proven they were right, the consequences are beginning to fall on the very sector Trump and the Republicans are supposed to actually care about – business.

Due to the reimposition of sanctions by the U.S., Boeing is going to lose at least $20 billion in commercial aircraft sales that it fought hard to win against major competitors, reports The Washington Post.

That includes a deal with Iran Air for 80 aircraft worth $17 billion, and a 30-plane deal with Iran’s Aseman Airlines worth at least $3 billion.

In addition, the European consortium Airbus, based in France, will lose at least $19 billion in aircraft sales.

Airbus has a deal to sell 100 planes to Iran Air and so far has delivered only three aircraft, the first new planes purchased by Iran in 23 years.

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Airbus is subject to Trump’s sudden abrogation of a valid treaty which the Iranians have not violated because some of the plane’s parts are made by U.S. companies – including United Technologies, Rockwell Collins and General Electric.- who in turn will also lose billions in revenue and profits.

The owners of Airbus – France, Germany and the U.K..- have all said they are not following Trump’s lead and will negotiate a new version of the nuclear deal with Iran.

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So it is likely that Airbus will soon seek out new non-American companies to make the parts they need, which in the long term will hurt American businesses even more.

Trump’s toady of Treasury Secretary, Steven Mnuchin, announced the U.S. would also cancel waivers that allowed for the sale to Iran of aircraft parts and services.

“These sanctions do impact all of the major industries,” said Mnuchin. “These are very, very strong sanctions; they worked last time. That’s why Iran came to the table.”

Despite Mnuchin’s arrogant rhetoric, it is not the same as last time. 

The Iranian sanctions worked because the Europeans, and even Russia and China went along with the boycott.

This time Trump made his decision unilaterally and there is no sign Russia, China or the Europeans will go along, so what America does has a lot less effect.

Iran has also opened new markets for its oil.

“Since the nuclear deal was signed and Iran was free to sell oil without restriction,” reports The  Washington Post, “the Islamic Republic has been able to make new sales of 700,000 barrels a day to Asia, led by China and India.”

Those deals will continue to gush billions in cash flow, so the kind of desperation and shortages Iran suffered from last time will not be nearly as severe.

On the other hand, the consequences on Americans are likely to be very real.

Mnuchin blithely says the U.S. will make up for the loss of Iranian oil with its own increased production and more oil from Saudi Arabia, but he is also the liar who said the Trump tax bill was for the middle class and would pay for itself  – all proven untrue.

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Instead, the impact will be to almost immediately raise the cost of gasoline at U.S. gas pumps, helping big oil companies worldwide to pump up their profits at the expense of U.S. consumers. 

Trump has shown little regard for the environment, people in need, children or other humans but he has claimed to be the president who helps business, but the longer he serves the more even that turns out to be a lie.

His tariffs have started an international trade war that is already costing American farmers and others big problems and big bucks, and now the rising cost of gasoline will send an added shock through the economy.

Russia’s Vladimir Putin could not have planned it better – Under Trump the U.S. is giving up its role as a leader of nations that is a trusted ally, and as a friend to the world’s needy, and now even as a trustworthy backer of business. 

The only question is when the recession will hit the U.S. not if, thanks to Trump, as the Russians cheer, China fills the void for global leadership, European allies are humiliated and authoritarian regimes that flout human rights are allowed to rise around the globe.

Benjamin Locke

Benjamin Locke is a retired college professor with an undergraduate degree in Industrial Labor and Relations from Cornell University and an MBA from the European School of Management.

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