Reading into Trump’s Letter to Iraq

USPA NEWS - On July 9, 2025, former U.S. President Donald Trump sent a formal letter to Iraqi Prime Minister Mohammed Shia’ al-Sudani, signaling Washington’s intent to reshape its trade relationship with Iraq under new, more balanced conditions. This letter holds significant economic and political implications that may shape the future of U.S.–Iraq relations and bring ripple effects across Iraqi society.

The letter announces a 30% tariff on all Iraqi goods entering the U.S. starting August 1, 2025, due to a persistent trade deficit caused by Iraq’s tariff and non-tariff barriers. However, the letter also offers a window of opportunity: any Iraqi company producing within the United States would be exempt from this tariff. This could lead to increased Iraqi investment in the U.S. market, granting Iraqi products access to the world’s largest economy. Moreover, the U.S. promises to streamline approvals for Iraqi businesses, potentially enhancing trade flow and easing bureaucratic hurdles.

Politically, the message reflects a strategic push from Washington to realign trade terms with Iraq while maintaining engagement. It places pressure on Baghdad to reconsider its economic policies, pushing for transparency, openness, and reciprocity—without compromising national sovereignty.

If handled wisely, this move could foster job creation, either through joint ventures or by establishing Iraqi production units in America. Improving the trade balance might also stabilize the Iraqi dinar and reduce inflation, benefiting everyday citizens.However, resistance to the U.S. terms may result in restricted exports, potential inflation, and broader economic strain—particularly on Iraq’s lower and middle-income population.

The letter is not merely a threat—it’s an offer. It invites Iraq into a deeper economic partnership, albeit on Washington’s terms. The real test now lies in Baghdad’s ability to respond diplomatically and pragmatically. Will Iraq seize the moment, or face economic headwinds?