Trade Cases

Trump Administration Imposes Sanctions on Iranian Steel Companies

January 12, 2020

Following the recent attacks in Iran, President Trump has imposed new sanctions on Iran including targeting 13 Iranian steel and mining companies. Additionally, sanctions will be imposed on three Seychelles-based entities, aluminum and copper companies and the Liberian-flagged and Chinese-owned vessel Hong Xun, known to transport metal products.

“We are also designating Iran’s largest metals manufacturers, and imposing sanctions on new sectors of the Iranian economy including construction, manufacturing and mining,” said Treasury Secretary Steven Mnuchin. “These sanctions will continue until the regime stops the funding of global terrorism and commits to never having nuclear weapons.”

The sanctions are expected to impact billions of dollars generated annually by the metals industry that add about 10 percent to the government’s economy and contribute to nuclear weapon development.

Targeted steel companies include Mobarakeh Steel Company, the largest steel producer in the Middle East and the biggest reduced iron producer in the world. Additional companies to be sanctioned include: Saba Steel, Hormozgan Steel Company, Esfahan Steel Company, Oxin Steel Company, Khorasan Steel Company, South Kaveh Steel Company, Iran Alloy Steel Company, Golgohar Mining and Industrial Company, Chadormalu Mining and Industrial Company, Arfa Iron and Steel Company, Khouzestan Steel Company, and Iranian Ghadir Iron & Steel Co.

This week’s sanctions are in addition to those imposed against Iran after the Trump administration withdrew the U.S. from the Iran nuclear deal, the Joint Comprehensive Plan of Action (JCPOA), in May 2018.

According to data from the U.S. International Trade Commission, the top three importers of Iranian steel in 2018 were Thailand, UAE and Iraq. Iran exported 9.2 million metric tons of steel in 2018, representing 8.7 percent of the total value of goods exported from the country.

Although the U.S. imports almost no Iranian steel, the sanctions in Seychelles, a small island nation, target three Chinese companies that trade Iranian steel and metals and will impact exports.

The sanctions are both primary and “secondary,” indicated Mnuchin. Secondary sanctions mean that entities from third countries that engage in business transactions with those Iranian companies may find their access to U.S. markets restricted.

In June, a policy brief by the European Council on Foreign relations illustrated the power that secondary sanctions can wield.

“Last summer, European capitals were reminded of the harsh reality that, through secondary sanctions, Washington can use access to the U.S. markets as a source of immense political power,” wrote the authors of the brief. “As the U.S. is one of Europe’s largest trade and financial partners, it is hard to find any European business that does not have direct or indirect exposure to these markets and systems. Given its extensive power to investigate and fine European actors – and to cut them off from the U.S. market – the U.S. Treasury’s influence prevails when U.S. and EU regulations and foreign policy diverge. As such, the mere threat of U.S. secondary sanctions on European entities has led to an exodus of EU companies from Iran and undercut a nuclear deal that once stood as a signal achievement of European foreign policy.”

When asked about the effectiveness of the sanctions during a press conference, Mnuchin said, “We have 100 percent confidence” that the sanctions will cut off billions of dollars of funds for the regime.