Iran War and the Future of US Tariffs: A Looming Shift in Trade Policy
The ongoing conflict in Iran is creating economic headwinds and forcing a reassessment of US trade policy, particularly concerning the tariffs implemented under Section 301 and other authorities. Rising inflation in the US, coupled with President Trump’s political considerations ahead of the November midterm elections, could lead to a partial rollback of these tariffs, though the underlying framework for trade protectionism is likely to endure.
Impact on Southeast Asia
Southeast Asia is particularly vulnerable to the disruptions stemming from the war in Iran. The region relies heavily on Middle Eastern energy supplies, with a significant percentage of crude oil and Liquefied Natural Gas (LNG) transiting the Straits of Hormuz destined for Asian markets. Specifically, the Philippines (96%), Vietnam (87%) and Thailand (74%) are heavily dependent on oil supplies from the Persian Gulf. Channel News Asia reports on these dependencies.
US Inflation and the Tariff Debate
The war in Iran is contributing to inflationary pressures in the US, as energy costs rise and impact the price of goods and services. US consumers are already experiencing higher gasoline prices. Reuters reported on rising gasoline prices in March 2026. Rising energy costs also affect food and agricultural prices, as the Middle East is a key supplier of fertilizer and fertilizer ingredients. Reuters details the threat to fertilizer supplies.
The Evolution of Trump’s Tariff Strategy
Following a Supreme Court ruling against the use of International Emergency Economic Powers Act (IEEPA) authority for reciprocal tariffs, the Trump administration has sought to re-establish trade protections through alternative legal mechanisms. A 10% global tariff was initially implemented under Section 122 as a temporary measure, intended to be replaced by more enduring tariffs under Section 301 and Section 232. Holland & Knight provides details on these investigations. Section 301 investigations, covering multiple countries, have already been launched. Reuters covers the launch of these new probes.
Political Considerations and the Midterm Elections
President Trump views the upcoming November midterm elections as critical to his political future, fearing impeachment by a Democratic-controlled House of Representatives and potential conviction in the Senate. Reuters reported on Trump’s concerns regarding impeachment. The unpopularity of the war in Iran – with only 38% of Americans expressing support, according to Gelliott Morris – further complicates the political landscape. Voter concerns about affordability and inflation are likely to be paramount in the elections.
Potential for Tariff Adjustments
Given these pressures, President Trump may be inclined to reduce tariffs to alleviate inflationary pressures and improve his electoral prospects. While the administration has launched investigations that could lead to new tariffs under Section 301, there is still time to adjust course before these tariffs are implemented. The Section 122 tariffs are set to expire in July 2026, providing further flexibility.
Implications for Southeast Asia
Southeast Asia should closely monitor these developments. A potential rollback of US tariffs could provide some relief to the region’s economies, which have been negatively impacted by the trade tensions. However, the long-term direction of US trade policy remains uncertain.
The war in Iran has also created logistical challenges, such as the mining of the Straits of Hormuz, which will require a “long and complicated” demining process. France 24 reports on the challenges in the Straits of Hormuz. This disruption will likely contribute to sustained higher energy prices for months to come.