Trump’s tariffs on Iraq: an opportunity to conclude massive energy deals with Washington

Trump’s tariffs on Iraq: an opportunity to conclude massive energy deals with Washington

2025-08-01 06:48

Shafaq News – Special Translation
In light of US President Donald Trump’s decision to impose tariffs on Iraq, the Atlantic Council has called for building a win-win relationship for both Washington and Baghdad, including concluding massive energy deals that would surpass even those concluded between Iraq and TotalEnergies or BP.

The US report, translated by Shafaq News Agency, explained that Iraq was among the countries that received a letter from Trump on July 9, advising Baghdad that its trade relationship with Washington was far from reciprocal. Therefore, its exports to the United States would be subject to a 30% tariff starting today, August 1, 2025.

However, the report indicated that the US trade deficit with Iraq is primarily due to Iraqi oil exports, which are already exempt from reciprocal customs duties.

He added that the new fees will not have a direct impact on the accounts, but there will be indirect effects resulting from the drop in oil prices due to the expected decline in global demand for oil.

The report noted that there is no public data on how the Trump administration made its decision regarding the 30% tariff rate with Baghdad, nor is there information available on Washington’s assessment of its expected impact on its uneven trade deficit with Iraq, as indicated in its letter to Iraqi Prime Minister Mohammed Shia al-Sudani.

However, the report stated that trade between the United States and Iraq is estimated at approximately $8.8 billion in 2024, including Iraqi exports to the United States of $7.4 billion, the majority of which is oil, while US exports to Iraq amount to $1.4 billion.

The report continued, stating that the top five goods imported from the United States to Iraq account for 70% of the total, including cars (39%), machinery (16%), pharmaceuticals (8%), electrical and electronic products (8%), and optical, photographic, technical, and medical equipment (7%).

However, the report noted that this data does not include all US exports of these same products, which are imported via a third country in the region by Iraqi importers. Data on the value of these exports is also unavailable, as they actually enter Iraq as exports from a third country; therefore, they cannot be identified as US products.

The report continued, “Taking these figures into account, the trade deficit between the United States and Iraq, with Trump’s tariffs in effect, is approximately $5.8 billion.”

The report stated that US exports to Iraq were considered relatively small, averaging $1.4 billion annually between 2012 and 2024, with trade declining from $2 billion in 2012 to $1.4 billion in 2024; while total exports to Iraq nearly doubled in the same time frame.

The report noted that among the reasons for this is the evolution of the Iraqi economy toward a consumer-driven economy, in line with the end of years of conflict, as well as the fact that Iraqis are increasingly obtaining similar consumer goods from China.

The report noted that between 2012 and 2024, Iraq’s total oil exports grew by 39%, while its exports to the United States declined by 64%.

The report stated that the promising aspect of Trump’s message lies in the fact that the tariffs are subject to review and the evolving relationship with the United States, which represents an opportunity that Iraq can exploit to build on vital aspects of the strategic framework agreement between the United States and Iraq. Baghdad can develop its economic energy relationship with Washington and secure Iraq’s energy independence by diversifying its sources of gas exports away from its reliance on Iranian gas imports.

The report explained that Iraq could achieve this by reaching a massive energy deal with American companies, adding that such a deal would have to include multiple interconnected components over several years, and could be larger and more strategic than the $27 billion energy deal signed with TotalEnergies in 2023, or the $25 billion energy deal signed with BP in early 2025.

According to the report, the framework of this massive deal could include interconnected deals between several American companies, covering four sub-components, as follows:

First: Alternative gas imports to meet Iraq’s demand for gas for power generation, through imports of US liquefied natural gas (LNG), in addition to the recent deal for pipeline gas imports from Turkmenistan.

The report continued that this opens and leads to the component linked to the second branch, which is:

Second: Developing vital infrastructure for the development of Iraq’s LNG infrastructure by American companies could contribute to supplementing LNG sources from the United States and building LNG infrastructure.

Third: Increase Iraq’s domestic gas production sources by capturing large quantities of flared gas using American technology and companies.

The report added that these three components lead to the fourth component, which is:

Fourth: Using this gas to generate electricity to meet Iraq’s needs to bridge the gap between supply and demand for electricity, the network of which could also be developed and modernized by American companies, such as GA Vernova.

The report concluded that this approach enhances the significant economic and energy aspects of the Strategic Framework Agreement. The successful implementation of the four components will also contribute to significant positive impacts on the Iraqi economy, creating more investment and commercial opportunities for American companies in Iraq’s evolving economic landscape.

shafaq.com