Episode summary
Trump’s 25% Iran Tariffs Explained | Prof G Markets
Prof G Markets
· · Hosts: Ed Elson, Scott Galloway · Guests: Maurice Obstfeld, Mark Zandi
Summary
Trump’s announced 25% tariff on any country doing business with Iran was described as a pressure tactic, but the guest argued it is mostly performative and unlikely to change conditions on the ground. The guest said Iran’s economy has been crushed by sanctions, money-printing, inflation above 50% last year, and a currency that fell more than 80% over the last year, helping turn economic frustration into broader anti-regime protests.
The guest also said the policy may cause collateral damage for the United States because it could disrupt trade relationships with major Iranian partners like China, Turkey, and the UAE. He argued that the far more important variable is whether the Trump administration moves from tariffs to military action, which he sees as the real uncertainty for markets and for regional stability.
On inflation, an analyst said the December CPI print was still biased lower because the October survey was missed during the government shutdown. After adjusting for that gap, he said inflation is closer to 3% year-over-year, not 2.7%, with core inflation near 2.9%. He also pointed to electricity costs as a major pressure point, saying demand from AI data centers is helping push prices higher.
Key takeaways
- The guest said Iran’s economy has been weakened by sanctions, currency collapse, and inflation, with the rial down more than 80% over the last year.
- The guest argued Trump’s 25% tariff threat is mostly performative and unlikely to force either Iranian concessions or a quick trade cutoff by Iran’s partners.
- The guest said the bigger market risk is possible military action, not tariffs, because that could create harder-to-predict geopolitical effects.
- An analyst said December CPI still understates inflation because the October BLS survey was missed; his adjusted estimate is about 3% year-over-year.
- The analyst said electricity inflation is being driven in part by demand from AI data centers and should stay elevated for the next year or so.
Notable quotes
“the tariff has been the allpurpose Trumpian response to uh everything he doesn't like”
“it looks like uh this is much more significant than the 2022 demonstrations and probably the the most severe um threat to the regime”
“I think I think the the the big uncertainty is uh if and when uh the Trump administration will um uh use some sort of military intervention”
“if you make an adjustment like we've done like we did this last month and we did this month to account for that that problem inflation CPI inflation is still 3% year-over-year”
“Straight up AI. I mean the demand for electricity from data centers is enormous. It's putting a lot of pressure on the electric power grid”
How the episode opens
Today's number 218. That's how many dB of sound a pistol shrimp produces when it snaps its claw. That makes it one of the loudest animals in the world, even louder than Alex Jones.
Welcome to Profy Markets. I'm Edson. It is January 14th.
Let's check in on yesterday's market vitals. Major indices fell from recent highs. Treasury yields declined after the latest inflation report.
More on that later. Oil prices rose on Trump's comments on Iran. We'll get to those in a moment.
And finally, JP Morgan shares dropped 4% after fourth quarter investment banking fees missed expectations. Okay, what else is happening? President Trump announced a 25% tariff on any country doing business with Iran.
Trump wrote that the order is quote effective immediately and that the decision is final and conclusive. However, the White House has not yet explained how the tariffs would be enacted or by what authority. It appears the move is a response to the Iranian government's violent crackdown on protesters, which has resulted in thousands of civilian deaths.
In a Tuesday morning truth social post, President Trump said he has canled talks with Iranian officials. And he's urged Iranians to quote, "Keep protesting and take over your institutions. The protest began in late December as inflation and Iran's collapsing currency, the real made everyday goods unaffordable.
They've since gained momentum, morphing into wider demonstrations against the Iranian regime. Okay, here to explain the economic situation in Iran and what these tariffs might mean for the country, we're speaking with Maurice Obsfeld, former chief economist for the International Monetary Fund and senior fellow at the Petersonen Institute for International Economics. Maurice, thank you for joining us again on Profy Markets.
Pleasure.
We've seen this crackdown from the Iranian regime. Uh then we see the tariffs announced from Trump.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- iran tariffs
- inflation data
- cpi
- economic outlook
- trade partners
Watch the episode
Watch “Trump’s 25% Iran Tariffs Explained | Prof G Markets” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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