Trump declared ‘economic warfare’ on Iran. What does that mean for Americans?

0:00Edward Fishman:This message comes from the Sierra Club, fighting to protect America's national parks and forests. These public lands are the nation's legacy, and their future is worth fighting for. Donate at sierraclub.org slash NPR. WBUR Podcasts. Boston.

0:24Edward Fishman:So there's really not all that much more for Trump to do. I think probably the one other step he could take would be to impose sanctions on Iran's main trading partners. President Trump is threatening Iran with an economic D-Day.

0:47It's Thursday, August 20th, and this is Here and Now Anytime from NPR and WBUR Boston. I'm Kalyani Saxena. Today on the show, we'll get an update on the U.S.-Canada trade talks after Trump held back on putting 50 % tariffs on Canadian goods. We're operating in a bit of a cloud here in which Donald Trump says the deal is done. The Canadian government says talks are ongoing. But here in Canada, we're kind of used to operating in that cloud. But first, President Trump is lobbying a new threat against Iran, warning the country to prepare for, quote, economic warfare and isolation on an unprecedented scale.

1:29It comes as Trump tries a new tactic to end a war that he said would last only weeks, but has stretched on for nearly six months. So what would economic warfare look like? Well, Trump says countries that evade the sanctions and help Iran will face severe economic consequences. Meanwhile, it appears Iran is unfazed. The country's foreign minister said on X today that Trump's threat is just a distraction from the U.S.'s mounting debt and accused the U.S. of economic terrorism. Rob Schmidt spoke with Edward Fishman, a senior fellow and director at the Council on Foreign Relations, about economic warfare.

2:11and the downstream consequences it could have on Americans and the global economy.

2:17Edward Fishman:So as you point out in a recent article for CFR, economic warfare has become more or less normalized over the past few decades, especially during President Trump's two terms in office. What might it look like in the situation with Iran? So look, Rob, Iran has been comprehensively sanctioned now for over a decade. Americans can't buy anything from Iran. We don't sell anything to Iran. Effectively, all of Iran's banks are fully cut off from the dollar and the international financial system. So really, all of the low-hanging fruit has been picked. I'd also add that the Trump administration has a naval blockade on Iran.

2:53Edward Fishman:So Iran's own oil exports are not really able to get out to the international marketplace. So there's really not all that much more for Trump to do. I think probably the one other step he could take would be to impose sanctions on Iran's main trading partners, you know, sanctioning Chinese banks, Chinese energy companies, banks in Dubai that are helping Iran evade sanctions. I think the challenge with that, though, is it would certainly court an economic conflict with China, which I think is something Trump will probably want to avoid. So what does that mean for Americans? I mean, it sounds like a lot of these measures that the Trump administration wants to take on Iran may not have a big impact on the U.S.

3:33Edward Fishman:economy. Well, I think a lot depends on how countries like China would retaliate. You know, if China responds to any sanctions on Chinese banks or energy companies with anything like the rare earth mineral export controls that they imposed last year after Trump's Liberation Day tariffs, that could have significant impacts on the American industrial economy. You know, last year when China imposed those export controls on rare earth minerals, within a few weeks, Ford had to shut down a factory in Chicago that makes its Explorer SUV. So that shows just how potent some of these tools China has can be.

4:06Edward Fishman:And they are a real risk to American industrial output, as well as people who work at those facilities. And for American consumers, that means higher prices, I'm guessing. Of course. This entire war is inflationary, right? I mean, the closure of the Strait of Hormuz has spiked energy prices, which raises prices for all manner of consumer goods. And then, of course, if you add into that mix escalating tensions between the U.S. and China, that would just make prices even higher, given how many things we import from China still to this day. You know, the World Trade Organization used to be instrumental in solving these trade disputes.

4:41Edward Fishman:And now, of course, it seems to be missing from the process. Obviously, the Trump administration has pulled the U.S. out of the WTO, but it did so because it felt the organization was no longer working as it was intended to. Talk a little bit about that. What kind of role could the WTO play in this? Trump has fundamentally reshaped how global trade works. To a certain extent, he's had a point where although China, you know, in some ways lived up to the letter of the law of the World Trade Organization, it definitely didn't appreciate the spirit of it and, you know, prevented American businesses from accessing the Chinese market, you know, stole intellectual property from U.S.

5:16Edward Fishman:businesses. So I think China in many ways was taking advantage of that system. We also, though, have to be careful about the medicine being worse than the disease in the first place. If we wind up imposing such aggressive sanctions and tariffs on other countries that it winds up tearing apart the good things that have underwritten the global economy, that would not be worth it. What good things remain between the U.S. and China when it comes to the global economy? Well, look, China is still one of our largest trading partners. You know, despite Trump's tariffs that started in 2017 and 18 and have carried on through the Biden administration and the second Trump administration, you know, the U.S.

5:54Edward Fishman:and China still have hundreds of billions of dollars annually in bilateral trade. And that's why I ultimately don't expect Trump to risk that over Iran right now. And Edward, you've held several foreign policy roles in the U.S. government, including serving on the Iran sanctions team, where you worked on developing policies to strengthen sanctions against Iran and maintain pressure during previous international nuclear negotiations. How do you see how the Trump administration is handling this? Look, I think that the Trump administration, unfortunately, got itself into a war where there's now no easy exit.

6:27Edward Fishman:If you go back to January of this year, the U.S. position vis-a-vis Iran looked as good as it has in many years, right? Iran's nuclear program was largely in shambles, and the Iranian economy was not doing very well. The Iranian government looked quite shaky. And I think, unfortunately, the US and Israel overreached, you know, went for regime change, and now have gotten a situation where Iran is still under significant hardline leadership and has now seized control of the Strait of Hormuz, you know, the world's most important energy choke point, which has given it sort of a lease on life. So I support the Trump administration in really standing up for the Strait of Hormuz being a free and open international waterway.

7:06Edward Fishman:I think the problem is that the Iranians have shown that they're willing to go to very great lengths to preserve that control, even using drones and missiles against neutral commercial vessels that are going through the strait. So they're not in an easy position, but I do think it's going to require significant pressure and diplomacy to get an outcome that we can live with. Edward Fishman is a senior fellow and director at the Morris R. Greenberg Center for Geoeconomics at the Council on Foreign Relations. Thank you, Edward. Yeah, my pleasure. Good to talk to you.

7:40Coming up, we're staying with the economy. The U.S. and Canada are locked in trade talks, trying to finalize a deal on tariffs. If that sounds like a little bit of deja vu, it's because earlier this week, Trump was this close to enacting his threat of 50 % tariffs on Canadian goods before abruptly extending the deadline for three days. There's reports that the two countries are making good progress towards a deal, but sticking points remain. And the clock is ticking. After the break, Indira Lakshmanan speaks with Peter Armstrong, senior business correspondent for the Canadian Broadcasting Corporation, about the negotiations.

8:22Stick around.

8:42Restrictions apply. See store for details.

8:45Edward Fishman:This message comes from Grainger. This is the story of The One. As a maintenance supervisor at a manufacturing facility, he knows keeping the line up and running is a top priority. That's why he chooses Grainger. Because when a drive belt gets damaged, Grainger makes it easy to find the exact specs for the replacement product he needs. And next day delivery helps ensure he'll have everything in place and running like clockwork. Call 1-800-GRAINGER. click Grainger.com or just stop by. Grainger, for the ones who get it done. This message comes from DonorsChoose. This back-to-school season put books, science kits, and more into kids' backpacks.

9:25Because when students have what they need, they're ready to succeed. Donate today and have your gift matched at DonorsChoose.org slash local.

9:34Edward Fishman:U.S. and Canadian officials may be closing in on a trade agreement. The goal is to reach a deal by tomorrow night. If they fail, President Trump has threatened to slap 50 percent tariffs on some Canadian imports starting Saturday. Canada is the United States' second biggest trade partner, but the two sides have disputes over cars, metals, dairy, and more. In a sign of just how fractious it's gotten, Canadians have boycotted American booze since Trump's first tariff threats last year. Now the president is dangling the possible revival of a controversial oil pipeline from Canada, known as Keystone XL.

10:12Edward Fishman:Peter Armstrong is senior business correspondent for the Canadian Broadcasting Corporation, and he joins us now. Peter, welcome. Good afternoon. So trade talks between the two countries have been stalled for the last year and a half. President Trump threatens massive tariffs, and suddenly negotiations are revived. So did this strategy of threatening your neighbor actually work? I think there's a fair argument to be made that it did. I think a lot of Canadians would say that It's the Americans that broke off the talks about a year ago and the broad outline of what we're hearing. And remember, we're operating in a bit of a cloud here in which Donald Trump says the deal is done.

10:48The Canadian government says talks are ongoing. But here in Canada, we're kind of used to operating in that cloud. But like the broad brushstrokes of what we're hearing this deal is going to end up looking like are looking an awful lot like the deal that was emerging last October, where there was going to be a bringing down of tariffs and especially on metals. And Donald Trump broke off those talks because one of the provinces here ran an ad during the World Series, in fact, that said that it was just a playing of Ronald Reagan reading something about how bad tariffs were. And that really upset the administration.

11:23So they called off talks. So there's back and forth on on who wasn't at the table. But, yeah, I think the threat of this deadline two nights ago was certainly, you know, there's nothing like a deadline to focus the mind, right? Right.

11:36Edward Fishman:Exactly. All right. So briefly, what kinds of concessions are reportedly being made by the two sides? So it's important to note the Canadians are being very almost unusually tight lipped about what's in this. And most of what we're hearing is from the Americans. So you need to take all this with a grain of salt. But at the end of the day, there's four main industries that are getting hit by the 232 tariffs, the sectoral tariffs, and it's steel, aluminum, the auto industry with auto parts as sort of an ancillary to that, and then softwood lumber. Now, softwood lumber is one of these weird files, and dear, I've been covering it literally for 30 years.

12:13This has been going on for my entire career and probably long before that. So it's almost off on its own, and we don't have a lot of information about what the give and what the take might be on that. That's still kind of in a black box. The big ones we're hearing about are steel and aluminum. Right now, the American tariff on Canadian goods paid by American importers when they bring it in is 50 percent. So that has meant largely Canadian steel hasn't been going to the United States. Aluminum, there really is not a lot of options to replace aluminum because the Americans said, well, we're going to slap a 50 percent tariff on you and we'll buy all our aluminum from Bahrain.

12:52Edward Fishman:Peter, let me interrupt you for a second, because as someone who doesn't import or export herself, I think I'm thinking the same thing a lot of listeners are thinking, which is how is this going to affect me as a consumer if a deal is done? Well, listen, if a deal is done, like take aluminum, for example. The cost of aluminum in the United States is 50 % higher in the U.S. than it is literally anywhere else in the world. Not just because of the tariffs, the tariffs are a big driver of that, but also because the U.S. had been sourcing, instead of getting it from Canada that's right next door, they've been sourcing it from Bahrain, which is a lot further away.

13:25Bahrain got hit by Iran during the war, so they're not shipping as much. And then the Strait of Hormuz closed, so they're not shipping anything at all. So it's really driven up the cost of aluminum. And when you think about aluminum, it's in everything, right? It's in every, like, look around the room you're in right now, and you could probably point at 15 things that have aluminum in it. So if there's a deal on this, that would bring the cost of aluminum in the United States for American producers of just about everything. It would bring their cost down. If there's a deal on steel, that would bring their cost down.

13:53And I think that's kind of the frustration. I was saying that the broad brushstrokes of this deal were probably or likely in place back in October. And we've waited all this time to finally get to a point where we can bring those costs down for the American importers of Canadian products.

14:07Edward Fishman:All right. Quickly, Peter, relations between these two neighbors, historically closest of allies, really strained now. If there's a deal, if Trump stops talking about Canada as the 51st state, do you expect an improvement? We've only got 30 seconds left. Yeah, I think an improvement, but I think it's really important to note just how much damage has been done. I'll use the, you mentioned the booze ban, for example. Even if they put American booze back on the shelves, I think it's going to be a long time before Canadians start buying American bourbon again or taking their family holiday in Maine or California or wherever it may be.

14:40There is lasting damage. It's going to have to get, it's going to take time for that to work out.

14:44Edward Fishman:There's rancor. And then we'll have to have you back to talk about the Keystone XL pipeline. Oh, I could go on for days. Have me back. All right, we'll have you back. Peter Armstrong, senior business correspondent for the Canadian Broadcasting Corporation. Thanks so much. No, you bet.

15:06And we've got one more story for you today. The American public is aflutter over Flock. That's the company behind the technology law enforcement is installing around the country to scan license plates with artificial intelligence. Now the police say, hey, this will help us solve crimes and chase leads. But people are concerned about mass surveillance and the abuse of this kind of technology in the hands of authorities. Rob Schmidt spoke with NBC News technology reporter Kevin Collier about all of this.

15:39Edward Fishman:So in like lawsuits, for instance, that we have reported on, there will be somebody that just has like a normal life and they travel from point A to point B every day for work or every weekday, and they either go to the grocery store. And in that process, they get photographed hundreds of times. Wow. You know, as I said, there's obviously been a lot of criticism, a lot of backlash against Flock and the use of it from politicians across the political spectrum, from local community groups, even former employees. Here's one former Flock staffer, Jonathan Poss, speaking at a town hall meeting in Waltham, Massachusetts in March.

16:13Edward Fishman:You know, Fox basically sold me this dream that we were helping find missing people. And it didn't take me very long to understand this very hard truth. Companies like these, their only role is to help the government spy on them. Their only role as surveillance companies is to bypass public scrutiny and just surveil, surveil, surveil. Should we know to hear that pause is now running for Congress in Massachusetts as a Democrat. at. Kevin, how big has the backlash against FLAT been? I have covered surveillance technology for more than a decade, and I've never seen anything like this. You can find that whole conversation at hereandnow.org, where we're also following other stories, including a look at Montana's new plan to make the state a medical hub that would give patients access to experimental treatments.

17:08Here and Now Anytime comes from NPR and WBUR Boston. Today's stories were produced by Hafsa Qureshi, Lynn Menegon, and Thomas Danielian. Today's editors were Todd Munt, Michael Scotto, and Micaela Rodriguez. Technical direction from Caleb Green, Matt Reed, and Nick Dusalt. Chris Bentley wrote the theme music with Mike Mischetto and Max Liebman. Our digital producers are Alison Hagen and Grace Griffin. Here and now's executive producer is Alan Price. Thanks for listening. See you tomorrow.