Trump slaps 30 percent tariff on Iraqi goods as Baghdad but downplays impact on oil exports

US President Donald Trump on Wednesday imposed a 30 percent tariff on Iraqi imports, a move Baghdad says will have limited economic impact due to the exemption of oil exports. The decision was announced in a formal letter sent to Iraqi Prime Minister Mohammed Shia Al-Sudani and shared across official US and Iraqi media platforms.

The tariff marks a reduction from an earlier figure of 39 percent, which Trump initially proposed on 2 April. Although originally scheduled to take effect earlier this year, its implementation has now been delayed until 1 August.

"If for any reason you decide to raise your tariffs, then, whatever the number you choose to raise them by, will be added on to the 30 per cent that we charge," Trump wrote in the letter, reaffirming his administration’s policy of "reciprocal tariffs" and warning against any retaliatory action.

Despite the combative tone, the letter also carried messages of goodwill. "My letter reflects the strength and commitment of our trade relationship… We will impose a 30 percent tariff only on all Iraqi products exported to the United States due to the trade imbalance… The United States will never let you down," Trump stated.

Iraq's Ministry of Trade quickly downplayed the move, stressing that it would not affect the country’s key exports to the US.

"The majority of Iraq's exports to the United States are crude oil, which is exempt from the new tariffs," ministry spokesperson Mohammed Hanoun told the Iraqi News Agency (INA). "Non-oil exports are minimal, and the actual impact is likely to be indirect–perhaps through global oil prices, which could influence Iraq's overall revenues."

Hanoun said the government had already taken swift and "wise" steps to minimise the potential fallout, including rapid policy responses aimed at bolstering commercial ties with Washington through financial coordination and diplomatic outreach.

In April, Prime Minister Al-Sudani chaired a high-level meeting to assess the economic implications of Washington's planned tariff hike. According to a statement from his office, the American decision was based on Iraq's trade deficit with the US, rather than any duties Baghdad imposes on American goods.

In response, the government announced a multipronged strategy to safeguard Iraq's trade and economic interests. This included facilitating direct access for American distributors and commercial agencies to operate inside Iraq, while also empowering Iraqi agencies to handle trade more independently and efficiently.

Improving coordination between Iraqi and US banks was another pillar of the plan, aimed at ensuring mutual benefit through closer financial cooperation.

Baghdad also tasked its negotiation team with reassessing the foundations of the trade relationship with the US, in hopes of creating a more balanced and sustainable partnership.

Additionally, the ministries of foreign affairs, finance, and trade, along with other relevant institutions, were instructed to open direct dialogue with their US counterparts. These talks are expected to focus on strengthening sectoral ties, monitoring global markets, and submitting weekly reports to the prime minister's office.

Madhar Mohammed Saleh, Al-Sudani's economic adviser, echoed the ministry's reassurance, saying Iraq's oil exports, which amount to roughly $4.5 billion annually, are not subject to the tariff.

"Other than crude oil, Iraq has no significant exports to the United States that would be seriously affected by the 30 percent tariff," Saleh told INA. He described Trump's letter as "encouraging" and an opportunity to deepen investment and trade links in strategic sectors like renewable energy, IT, and high-quality consumer goods.

Independent economist Ziyad Al-Hashemi also downplayed the impact. "The cost of Iraq's non-oil exports to the United States may rise, but the effect will be marginal at best. These tariffs appear aimed at applying a standard policy across all countries rather than punishing Iraq specifically," he said in a post on the X social media platform.

Nonetheless, Hanoun warned of broader economic risks tied to volatility in oil markets. "Global inflationary pressures could influence supply and demand dynamics, possibly lowering oil prices. That, in turn, would weigh on Iraq's economic growth and fiscal stability."

Despite the imposition of tariffs, both Washington and Baghdad have signalled a desire to maintain constructive ties. Trump closed his letter with a nod to future cooperation: "We look forward to working with you as a trade partner for many years to come."