Prof G Markets Trump’s 25% Iran Tariffs Explained
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Jan 14, 2026 
Maurice Obstfeld, former chief economist at the IMF, discusses the dire economic situation in Iran, linking recent protests to hyperinflation and a currency crisis intensified by Trump's 25% tariffs. He assesses these tariffs as largely performative, questioning their real impact. Mark Zandi, chief economist at Moody's Analytics, reveals inaccuracies in inflation measurements, suggesting CPI is closer to 3% due to missing data and warns about threats to Fed independence potentially leading to higher inflation. Both highlight significant implications for markets and policy.
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Economic Collapse Driving Iran Protests
- Iran's economy is collapsing from sanctions, money printing, and currency depreciation that triggered hyperinflation and mass protests.
- Maurice Obstfeld says the rial fell over 80% last year and inflation exceeded 50%, driving widespread unrest.
Tariffs Are Likely Performative
- Trump's 25% tariff targets any country doing business with Iran but lacks clear enforcement details and authority.
- Obstfeld views the tariff as mostly performative and unlikely to change on-the-ground behavior in Iran quickly.
Military Action Carries Uncertain Consequences
- The bigger risk to Iran's regime may be U.S. military action rather than tariffs, but military strikes carry unpredictable spillovers.
- Obstfeld warns a one-time strike may not topple the regime and lacks a credible 'day after' plan.