Bessent announces new ‘unprecedented’ sanctions on Iran
Treasury Secretary Scott Bessent outlined further sanctions against Iran called “Operation Economic Outcast.”
In a matter of days, President Donald Trump’s administration reignited a trade war with Canada, pledged to bring about an “economic D-day” for Iran and spooked representatives from the U.S. cattle industry with its plans to import 300,000 metric tons of beef.
Shikha Jain, a Simon-Kucher partner and lead of the consumer sector for North America, said these decisions mean U.S. consumers will likely pay more for items imported from Canada and face higher costs at the gas pump. They could, however, see lower beef prices given the proposed imports, though details of that plan remain unclear.
As many Americans continue battling rising costs, here’s a look at these new economic developments and what they mean for your wallet.
Why is the US in a trade war with Canada?
The Trump administration first announced new tariffs on an estimated 5% of Canadian imports July 20 and said they were scheduled to take effect on Aug. 19. In an Aug. 18 statement, Trump paused their implementation for three days as trade talks between the two nations continued. Late last week, those negotiations fell apart.
The Trump administration imposed 50% tariffs on an estimated $20 billion worth of Canadian imports and Canadian Prime Minister Mark Carney announced dollar-for-dollar retaliatory counter tariffs scheduled to take effect on Sept. 8.
In an Aug. 22 news conference, Carney said the United States’ proposed new terms were “uneconomic, unfair, and undermined the net benefits for Canada.”
“In short, they asked too much, and they offered too little,” Carney said.
U.S. Trade Representative Jamieson Greeer told Fox News Aug. 22 the U.S. would respond to Canadian retaliation.
“We don’t have new talks planned with the Canadians,” Greer said. “We’ve said enough, and so we’ve taken countermeasures.”
On Aug. 24, Trump further escalated the trade war by announcing the United States, starting Jan. 1, 2027, will double tariffs on all cars, trucks, automotive parts and steel imported from Canada, bringing the rate to 50%.
What do tariffs on Canadian imports mean for US consumer prices?
The U.S. tariffs on Canadian imports are expected to primarily impact goods flowing into the United States from Canada’s auto, alcohol and dairy industries, while oil, natural gas, critical minerals and a few other Canadian products remain exempt. The White House in July published a a long list of goods that would be affected. It ranges from cameras and hockey equipment to silver and some building materials.
Jain listed a few Canadian products sold directly to consumers that will likely experience price increases, including alcohol, candles, perfumes, clothing, jewelry and some food products.
“Doesn’t mean that your entire grocery bill is going up by 50%, but it does mean that a lot of your select items will go up by a decent amount,” Jain said.
Because many U.S. home builders have historically sourced materials from Canada, she said 50% tariffs on things like plywood and lumber may make the already difficult task of building new homes an even more expensive one.
“New builds will go up in price, then homeowners will try to renovate their homes, but in general, they’ll find that also renovation projects will go up in price,” Jain said.
If Trump follows through with his plans to raise tariffs on auto-related Canadian imports to 50%, Jain said Americans will likely pay more for cars because several major automakers rely on assembly plants in Canada before importing them to the United States to sell to American consumers.
“The total cost of manufacturing the car goes up, and a lot of that gets passed onto the consumer,” she said. “People think that ‘Oh, I’m going to buy GM,’ but actually, that doesn’t necessarily mean that it’s going to be cheaper.”
What does Canadian retaliation mean for the US?
Carney said Canada’s retaliatory counter-tariffs on American goods will be concentrated in sectors including steel, dairy, appliances, agricultural equipment, pulp and paper and electronics.
Jain said U.S. producers who regularly export products to Canada will likely face lower demand and need to rethink their supply chains to serve other countries or more U.S. consumers. She added that people sometimes forget U.S. businesses often import materials from Canada, like steel, and use them to make products that are then exported back.
“All of that gets disrupted and might get hit with double tariffs,” Jain said.
In his Aug. 22 news conference, Carney also appeared to threaten the possibility that Canada could halt its energy exports to the United States.
“Canada fuels American growth, supplying 99% of their natural gas imports, 85% of their electricity imports, 60% of their crude oil imports,” Carney said. “I don’t think they want us to stop sending any of that energy.”
At a time when American consumers are already paying more at the gas pump due to oil disruptions stemming from the U.S.-Iran war, Jain said the United States should make sure not to “exacerbate any of these situations.”
“It could be a credible threat, but the question is always how, where will Canada sell this?” she added. “Supply chains were set up to transfer all that energy to the U.S.”
What does ‘economic D-Day’ for Iran mean for US consumers?
With hopes of a ceasefire between the United States and Iran tabled, Trump on Aug. 22 posted a map to Truth Social labeling the Strait of Hormuz — a waterway vital to the transportation of oil that’s remained at the center of the conflict — a U.S. territory. The next day, Treasury Secretary Scott Bessent vowed the United States would begin “the single greatest financial offensive ever marshalled against an adversary” in a piece published in the Financial Times.
In an Aug. 24 news conference, Bessent said the U.S. Treasury had begun “Operation Economic Outcast” and that its Office of Foreign Assets Control is sanctioning more than 60 entities, individuals and vessels that enable the Iranian regime to procure illicit nuclear and missile technology, conduct cyber operations and generate oil revenue.
He said representatives from the United States and identified countries are meeting to discuss timelines to shut down those activities. Bessent added that “any entity that facilitates money laundering” on Iran’s behalf will be “removed” from the U.S. dollar system.
“We are launching an economic onslaught against Iran’s financial connections around the globe,” Bessent said. “Our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone.”
In response to Bessent’s earlier promise of an “economic D-Day,” Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, threatened to halt all oil exports.
“If the economic war continues, not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf,” Rezaei wrote in an Aug. 23 X post. “Iran will regard any country’s participation in or support for America’s economic war against the Iranian people as an act of war.”
Jain said U.S. consumers can expect gas prices to remain elevated, or for them to rise even further.
“Because of the sanctions, and once our reserves run out, we don’t know what could happen there,” Jain said. “Fuel prices have roughly gone up 30% since the start of the Iran war, and that might continue to escalate.”
Will Trump’s plans to import beef bring down US prices?
Other than at the gas pump, one of the biggest financial pain points for Americans is at the grocery store. In recent months, consumers have noticed they are paying significantly more for beef. The U.S. cattle supply remains at multi-decade lows after years of drought and the spread of a parasitic New World screwworm near the Mexican border drove prices higher.
In July, ground beef prices were up 9% over the year, representing a much steeper increase than the 3.4% rise in costs estimated for all items, according to Labor Department data.
In response, Trump announced on Aug. 21 that he had made a 90-day deal for foreign ground beef exporters to sell their product at a 25% discount in exchange for not paying U.S. out-of-quota tariffs.
“This deal will reduce prices for Americans while giving space for our Great American Beef Herd to grow again,” Trump wrote on Truth Social.
In theory, increased supply met with unchanged U.S. demand could lead to lower ground beef prices, however, it was not immediately clear with which countries Trump has struck a deal. He declined to say which nations were part of the agreement when asked by a reporter later on Aug. 21.
The deal was met with backlash from the National Cattlemen’s Beef Association, which said it was “not the way to rebuild the American cattle herd,” and Sen. Tim Sheehy, R-Montana, who said he advised Trump against this course of action.
“American ranchers have been struggling against the packer monopoly for decades, and this will further harm them – most of whom are MAGA Republicans,” Sheehy said in an X post. “This action will make it more difficult for American ranchers to rebuild our herd and bring down prices for the American people.”
A White House official told USA TODAY the Trump administration plans to work with ranchers to expand domestic beef production over the long run and added the president will formalize the import deal with an executive order in the coming weeks.
Reach Rachel Barber at rbarber@usatoday.com, follow her on X @rachelbarber_, and subscribe to her newsletter “Making More of Your Money” here.