Talking Points – EU, US, Iran, Japanese Yen, Swiss Franc, EUR/USD
- US sanctions on Iran may reignite EU-US trade war, decrease Iranian oil[1] exports
- Global trade war could hurt growth, cause widespread dovish monetary policy shift
- Yen, Franc may rise as commodity currencies and the Euro[2] fall amid risk aversion
BACKGROUND - A Brief History of Trade Wars, 1900-Present[3]
The US stated on August 6th that it was re-imposing sanctions against Iran. This is after US President Donald Trump announced in May that he was going to pull out of 2015 nuclear disarmament deal with Iran, officially titled the Joint Comprehensive Plan of Action (JCPOA). The President seeks to strike a new “tougher” deal with Iran that will ensure they will never be able to build a nuclear weapon.
This is all occurring despite evidence indicating Iran has been cooperating with international inspectors from the International Atomic Energy Agency (IAEA). The first wave of sanctions include a ban on any transactions involving the US Dollar[4], gold[5], precious metals, aluminum, steel, commercial passenger aircraft, and coal. The US has also banned the imports of Iranian carpets and foodstuffs.
Another wave of sanctions is set to hit Iran in November, specifically targeting the oil and gas industries. Analysts and policy makers are worried that re-imposed sanctions will push Iran to engage in nuclear activity beyond the legal parameters.
However, the President’s view on the matter indicated that the arrangement made in 2015 undermined global security, flagging yet another Obama-era initiative as one of
