The harsh effects of Trump's Iran sanctions, and why Iranians worry the worst is still to come

People check currency exchange rates in front of a shop in Tehran on Aug. 8, 2018. (Atta Kenare / AFP/Getty Images)

In the days since some U.S. sanctions on Iran snapped back into place, the signs of misery have been everywhere in Tehran’s commercial districts.

Stores are open but empty. Shopkeepers pass the time on their cellphones and exchange tales of economic woe: prices soaring, workers laid off, inventory going stale.

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President Trump has said his goal is to place “maximum economic pressure” on a country he accuses of fomenting instability and backing U.S. adversaries across the Middle East.

But many Iranians believe the Trump administration wants to topple the theocracy in place since the 1979 Islamic Revolution — a risky policy that Iran’s deeply entrenched clerical establishment has many ways to survive.

Meanwhile, the sanctions are falling hardest on ordinary Iranians, with the toughest restrictions yet to come.

A man exchanges Iranian rials for dollars at a shop in Tehran on Aug. 8, 2018. (Atta Kenare / AFP/Getty Images)

Two phases of renewed U.S. sanctions

When Trump withdrew in May from a multilateral agreement governing Iran’s nuclear program, he set in motion a 180-day plan to reinstate U.S. sanctions that were in place before the deal was struck in 2015 between Iran and six other nations: the United States, Britain, China, France, Germany and Russia. Anyone trading with Iran in violation of the sanctions risks being barred from the U.S. financial system and losing access to dollars.

The sanctions go back into effect in two stages.

The first phase blocks Iran from purchasing U.S. dollars and imposes penalties on companies for selling Iran auto parts and commercial planes, which Trump administration officials allege Tehran could use to smuggle weapons to Syria.

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The second phase is expected to deliver more pain because it targets oil exports, which account for one-fifth of Iran’s economy. But the effect was felt even before the first phase went into place this month.

What changing prices say about Iran’s economic troubles

As the Trump administration edged closer to leaving the nuclear deal, Iranians fearing an economic crash rushed to stockpile foreign currency.

The Iranian rial has lost more than half its value since January, and this month the dollar climbed to an all-time high of more than 100,000 rials on the unofficial market.

Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

Iranian women peer in the window of a jewelry shop in Tehran. (Abedin Taherkenareh / EPA/Shutterstock)

Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

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A traditional water cannon salute welcomes a new Iran Air commercial aircraft at Mehrabad airport in Tehran on Aug. 5, 2018. Iran acquired five new ATR72-600 airplanes from a European consortium the day before U.S. sanctions were restored. (Mohammad Hassanzadeh / Associated Press)

Foreign investors apply the brakes

Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

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Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

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Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

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Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

Oil sector to see biggest effect

Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

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Nov. Dec. ’18 Feb. Mar. Apr. May Jun. Jul. Aug. 20,000 40,000 60,000 80,000 100,000 120,000 rials 20,000 40,000 60,000 80,000 100,000 Rising cost of U.S. dollar in Iran Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Bonbast.com

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

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’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

Some of Iran’s trading partners signal support — for now

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

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’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

An Iranian woman raises her fist amid the smoke of tear gas at the University of Tehran during a protest driven by anger over economic problems on Dec. 30, 2017. (AFP/Getty Images)

Will sanctions exacerbate antigovernment sentiment in Iran?

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

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’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 800 1,200 1,600 2,000 2,400 2,800,000 barrels/day 800 1,200 1,600 2,000 2,400 Iran's crude oil exports Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 @latimesgraphics Source: Organization of Petroleum Exporting Countries

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Iranians walk through a carpet market inside Tehran's old bazaar. (Abedin Taherkenareh / EPA/Shutterstock)
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