How Customs Will Track Which Companies Trade with Iran—And What That Means

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The problem? Nobody—not Customs officials, not importers, not the countries supposedly affected—has any idea how that’s supposed to work.

There’s no executive order. No Federal Register publication. No guidance from Treasury, the U.S. Trade Representative, or U.S. Customs and Border Protection about what “doing business with the Islamic Republic of Iran” means or how anyone would enforce it.

Thousands of companies import goods into the United States from nations that have commercial relationships with Iran—which includes most of the world’s major economies. They can’t calculate what their products will cost. They can’t commit to prices for customers. They can’t determine whether their specific shipments fall under a levy that may or may not exist in any legally enforceable form.

Which Companies Are “Doing Business with Iran”?

Here’s what Customs officials are supposed to figure out: Which companies are “doing business with Iran”?

That sounds straightforward until you try to implement it. Does the duty apply to every company in China because China as a nation buys Iranian oil? Does it apply only to Chinese companies that have direct commercial relationships with Iran? What about a Chinese manufacturer that exports electronics to the U.S. but whose parent company’s subsidiary does occasional dealings with Iranian firms—does that trigger the duty?

What if that relationship is buried three layers deep in a corporate structure specifically designed to obscure ownership? None of these questions have answers.

Compliance experts describe this as a “significant implementation gray area.”

When the government agency that enforces sanctions wants to prohibit dealings with specific entities, it publishes a list—a government blacklist of banned companies—naming exactly who you can’t do business with. Companies check transactions against that list. Clear rules, clear enforcement.

Or consider how Customs normally determines where something comes from. A product’s origin is based on where the main manufacturing or assembly work happened. A component made in China and assembled in Vietnam is Vietnamese. This is based on physical manufacturing location, not on who owns the company or what other dealings that company has halfway around the world.

This duty breaks that model entirely. Customs would need to determine who owns and controls each company exporting to the United States from potentially impacted regions. Then they’d need to check that ownership information against a list of entities trading with Iran (which doesn’t exist in this form). Then they’d make a determination about whether that relationship triggers a 25 percent levy. On every shipment. From dozens of trading partners.

The White House, when asked for implementation details, has referred reporters back to the Truth Social post.

Who This Hits

China is the obvious target. If this duty gets implemented, Chinese goods entering the U.S. could face combined levies that could reach 55 percent when stacked on top of existing duties. The current effective tariff rate on Chinese goods is 47 percent as of early 2025, following an October 2024 agreement that reduced rates from a previous high of 57 percent. The announcement doesn’t clarify whether the 25 percent would be added to current rates or would replace existing duties.

Either way, it would demolish the truce Trump and Xi Jinping negotiated three months ago. That agreement brought average duty rates down from 40.8 percent to 30.8 percent and was supposed to provide stability for companies on both sides.

India faces exposure too. Indian companies exported $1.24 billion worth of goods to Iran in fiscal year 2024-25—mostly basmati rice and pharmaceuticals. That’s a tiny fraction of India’s total exports, but it’s concentrated in commodity sectors already operating on thin margins.

Those exports are specifically authorized as humanitarian goods under existing OFAC regulations. The U.S. permits food and medicine sales to Iran even under sanctions, viewing them as not supporting the Iranian government or military.

So does the levy apply to humanitarian goods? Indian exporters are asking. The administration hasn’t answered.

Turkey, the UAE, Pakistan, Iraq—all conduct commercial activity with Iran. All could theoretically face this levy. The full list of impacted trading partners remains unclear because the announcement didn’t specify one.

What Authority Permits This?

Trump’s trade policy throughout 2025 has relied heavily on the International Emergency Economic Powers Act (IEEPA), a 1977 law that lets presidents regulate international commerce during declared national emergencies. While IEEPA grants broad authority to block transactions and freeze assets, its application to tariffs specifically has been legally contested, with questions about whether tariffs—which generate government revenue—fall within the statute’s scope of regulating or prohibiting transactions.

Trump could pivot to alternative authorities. He could use a law that lets presidents impose duties for national security, or a law that lets presidents respond to unfair trade practices. Both require procedural steps: investigations, findings, time for public input and feedback. The administration has bypassed these entirely by announcing levies via social media.

The Iran announcement cites no legal authority and provides no statutory basis. While Trump has invoked IEEPA for other tariff actions, this specific Iran announcement does not reference any statutory authority. That’s the difference between a lawful order and a presidential wish.

The Implementation Problem

Even when Trump has imposed duties before, there’s typically been a lag between announcement and enforcement, giving importers time to adjust.

This time, Trump’s language suggests he expects the levy to apply right now, to shipments already in transit. Customs can’t begin assessing duties without first establishing clear criteria for determining which shipments qualify. The agency would need to modify how duties are organized and applied, update procedures at ports of entry, train officers, and establish systems for documenting which companies have commercial relationships with Iran.

Until formal guidance appears, Customs faces an impossible choice. Apply the duty aggressively and risk owing hundreds of millions in refunds if courts later rule it unlawful. Or decline to apply it and face accusations of defying a presidential order.

For importers, the uncertainty is equally paralyzing. You can’t cost your supply chain when you don’t know whether a 25 percent duty will suddenly apply to your shipments based on criteria nobody has defined.

Duties as Foreign Policy

This isn’t Trump’s first attempt at what experts call extra tariffs designed to punish countries for trading with enemies the U.S. opposes. Similar threats have been made regarding Russian oil purchases, with proposed rates ranging from 25 to 500 percent.

But those earlier versions targeted specific commodities—oil—which leaves records that show where oil came from through maritime tracking, insurance documents, and banking records. A nation either bought Venezuelan oil or it didn’t.

The Iran version is far more expansive. “Doing business with Iran” encompasses everything from energy to agriculture to textiles to pharmaceuticals to services. Companies in regions around the world may have complex, sometimes deliberately obscured relationships with Iranian entities, particularly if those relationships are structured through middlemen to evade existing sanctions.

How is Customs supposed to track that? The agency would need either a real-time database of all companies trading with Iran (which doesn’t exist) or the capacity to conduct individual investigations into corporate structures and foreign commerce for each potentially impacted shipment (which it doesn’t have).

You can’t enforce a levy based on criteria you can’t verify.

What Happens to Prices

If this duty gets implemented broadly, American consumers will pay more for electronics, textiles, appliances, and other categories dominated by imports from China, India, Turkey, and other impacted regions. The New York Federal Reserve estimated in January that duties imposed to date have already contributed about half a percentage point to current inflation rates of 2.75 percent. Additional levies would add further pressure.

How much depends on implementation details that don’t exist yet. Does the duty apply to all imports from companies with any Iran connections, or only to products from specific divisions that have commercial relationships with Iran? The difference could be billions of dollars in consumer costs.

Supply chain managers can’t plan around this uncertainty. Companies that source components or finished goods from potentially impacted regions can’t calculate the total cost of goods when they arrive without knowing whether the levy will apply to their specific products. The announcement itself—regardless of implementation—already creates economic drag.

The Constitutional Question

There’s a fairness problem here that legal challenges will almost certainly raise. Companies have constitutional protection requiring clear rules before punishment. A law that provides no clear definition of what triggers its application, no advance notice mechanism for impacted importers, and no transparent criteria for determination could be ruled illegal by courts.

You can’t punish companies for violating rules you haven’t defined.

Right now, this duty—to the extent it exists at all—is arbitrary by definition, because nobody can tell you with certainty what conduct it prohibits or how compliance would be determined.

What Comes Next

All the implementation questions remain. How do you identify impacted companies? What documentation proves compliance? When does the levy take effect? What process exists for challenging determinations?

Until those questions get answered—through formal executive orders, regulatory guidance, and procedures—this remains more threat than policy. Threats don’t get collected at ports of entry.

Compliance attorneys are advising clients to maintain operational continuity while preparing for rapid response once guidance appears.

That’s not how policy is supposed to work. A presidential announcement with no legal foundation, no implementation mechanism, and no clear answer to the most basic question: How would Customs track which companies have commercial relationships with Iran, and what would that mean for the goods they export to the United States?

Nobody knows. Including, apparently, the people who would have to enforce it.

Economic Ripple Effects

Beyond the immediate confusion at ports of entry, this announcement creates broader economic uncertainty that extends throughout global supply chains. Multinational corporations with complex sourcing networks now face the prospect of restructuring entire procurement strategies based on rules that don’t yet exist.

Consider a typical electronics manufacturer. Components might come from dozens of suppliers across multiple regions. If even one supplier has indirect ties to Iranian commerce—perhaps through a parent company’s separate division—does that contaminate the entire product? The announcement provides no guidance on how far down supply chains enforcement would reach.

Financial markets have already begun pricing in this uncertainty. Companies with significant exposure to potentially impacted regions have seen stock volatility increase as investors struggle to model the financial impact of a policy with no defined parameters. Currency traders are watching for signs of how major trading partners might respond, whether through retaliatory measures or by adjusting their own commercial relationships with Iran.

Companies typically plan manufacturing capacity and supply chain infrastructure years in advance. When the rules governing international commerce can change overnight via social media post, with no clear implementation timeline or enforcement criteria, that planning becomes nearly impossible.

International Response and Diplomatic Implications

The announcement has already generated diplomatic pushback from several trading partners who view it as overreach into their sovereign commercial decisions. India’s government has publicly stated that its humanitarian exports to Iran comply with existing U.S. sanctions exemptions and should not trigger additional duties.

China has not yet issued a formal response, but state media outlets have characterized the announcement as evidence of “economic coercion” and suggested it violates World Trade Organization principles. Whether China would challenge the policy through WTO dispute resolution mechanisms remains unclear, particularly given the policy’s current lack of formal legal structure.

European nations, while generally aligned with U.S. policy goals regarding Iran, have expressed concern about the precedent of using duties to enforce foreign policy objectives. Several European companies maintain limited commercial relationships with Iran for humanitarian goods, and the lack of clarity about whether those relationships would trigger U.S. duties has created anxiety among European business groups.

The broader diplomatic question is whether this approach—threatening sweeping economic penalties based on other nations’ sovereign trade decisions—represents sustainable foreign policy. Allies and adversaries alike are watching to see whether the threat materializes into actual enforcement, and what that might mean for their own economic relationships with the United States.

Historical Context and Precedent

The use of economic pressure to achieve foreign policy goals has deep roots in American statecraft, but the specific mechanism announced here—duties triggered by third-party commercial relationships—represents relatively uncharted territory.

Previous administrations have used targeted sanctions to prohibit specific transactions with adversary nations. They’ve imposed duties in response to unfair trade practices. They’ve restricted exports of sensitive technologies. The combination of broad duties applied based on other nations’ commercial relationships with a third party represents a significant expansion of how economic tools have traditionally been deployed.

The closest historical parallel might be secondary sanctions programs, which penalize foreign entities for doing business with sanctioned parties. Those programs typically operate through financial system access restrictions rather than duties, and they include clear designation processes and criteria for determining which entities face penalties.

What makes this announcement unusual is its breadth combined with its lack of specificity. It threatens to affect a massive volume of commerce while providing no clear mechanism for determining which specific transactions or entities would actually face penalties.

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