# Trade tensions and Iran sanctions

By Susannah Streeter — 2026-08-24

Susannah Streeter, chief investment strategist at Wealth Club, said: “London’s Footsie is treading water in early trade as investors assess fresh fractures on the trade landscape and the threat of hard-line sanctions against Iran.

“Wall Street is set for a weak start as worries about the US debt pile continue to build and long-term debt remains highly expensive to finance amid the Trump administration’s highly capricious policymaking.

“The US is changing tactics in its battle against Iran, and its fight to get oil flowing more freely from the region. Sanctions are the latest weapon of choice and the arsenal is set to be unveiled at a press conference later.

“Using the invective the administration has become infamous for, Treasury Secretary Scott Bessent stated in an interview that “economic D-Day is coming for Iran.”

“The emphasis is expected to be on isolating Iran economically and targeting its trading partners, with oil exports and the financial channels supporting Tehran likely to be central to the measures.

“But quite how effective this will be, given China is Iran’s biggest customer for oil, is far from clear.

“The reaction on oil markets has been muted, with Brent crude dropping slightly but still trading around $93 a barrel.

“There may be some relief that the threats have moved from military strikes to some form of super sanctions, but there is little confidence that a route to a peace deal will open up any time soon, with Iranian Supreme National Security Council secretary Mohsen Rezaei vowing to halt oil exports from the Gulf if the economic war continues.

“However, there are some hints that there may be splits opening up within Iran’s leadership about strategy and increased willingness among some to get back to the negotiating table.

“Having stirred up a hornets’ nest in the Middle East, there may have been some expectation that the US administration would seek to bolster relationships elsewhere, but instead the opposite has happened.

“Relations between the USA and Canada have taken another fractious turn after trade talks collapsed, leading to 50 per cent tariffs on some Canadian goods being imposed over the weekend.

“The new duties will affect around five per cent of Canada’s exports to the US, covering a range of products including food, furniture, clothing, cosmetics and cement, and they come on top of existing tariffs on steel, aluminium, cars and timber.

“Canadian exporters will be bracing for a drop in sales if US importers try and find alternative supplies rather than paying the tariffs.

“But it’s likely many costs will be passed on through wholesalers and retailers and it will be American consumers who’ll end up paying more, with tariffs acting like a tax on imports.

“While the impact on inflation through this latest hike should be relatively contained, the cumulative effect of tariffs across multiple trading partners is an increasing worry, especially combined with higher energy prices induced by conflict in the Middle East.

“The collapse in US-Canada trade talks could add another upward nudge to Treasury yields, with the trade row deepening concerns about US economic policy, mounting debt and inflationary pressures.

“The Trump administration has tried to sell tariffs as a way of bringing in huge amounts of government revenue and helping tackle America’s debt mountain.

“But the chaotic tariff regime has been beset with legal challenges and has led to mass refunds, so far from making a dent, the US deficit is heading towards $2.1 trillion this year and the national debt has just breached $40 trillion.

“Also, tariffs and wars are not just costly, they risk acting as a drag on growth while simultaneously pushing up prices, creating a toxic combination.

“Slower growth can also mean weaker tax revenues, making it harder for the US to grow its way out of its debt mountain.

“These are all concerns that will be playing on central bankers’ minds, ahead of the key Jackson Hole summit later this week, and investors will be looking for insights from Fed Chair Kevin Warsh about where interest rates could head given the highly tricky economic and monetary environment.”

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