The Sanctions Tax: How Iran-Linked Tariffs and China's De Minimis Shock Are Quietly Repricing Your Payment Corridors

LONDON / TORONTO — On February 6th, President Trump signed an executive order that most treasury teams barely registered. It authorises a 25% tariff on imports from any country that "directly or indirectly purchases, imports, or otherwise acquires any goods or services from Iran."

Read that again. Not sanctions on Iran. Tariffs on Iran's trading partners.

That's China, Turkey, the UAE, India, and Iraq — five of the busiest trade corridors on earth. Countries through which billions of pounds in legitimate, non-Iran-related trade flows every single day. Countries whose currencies your treasury team is probably settling in right now.

This is not a compliance story. This is a pricing story. And the price just changed.

The Blast Radius Is Wider Than You Think

The conventional reading of Trump's executive order focuses on oil. China buys roughly 80% of Iran's crude. Turkey imports 15% of its natural gas through an Iranian pipeline agreement expiring mid-2026. The UAE has long served as a re-export hub where Iranian commercial activity blends with legitimate Gulf trade.

But the order doesn't limit itself to petroleum. It covers "any goods or services." The Commerce Department has been tasked with identifying countries engaged in "relevant transactions" — a definition so broad that compliance teams at Castellum.AI are already warning firms to "prepare for secondary sanctions risk tied to correspondent banking, trade finance and cross-border payment exposure" across China, the UAE, Turkey, and India.

Here's what this means for your treasury: even if your company has zero Iranian exposure, your payment corridors now run through countries that do. And those countries face a potential 25% tariff on their own exports to the US — a threat that will ripple through their currencies, their banking relationships, and the cost of moving money through them.

The AED Problem Nobody Is Discussing

The UAE is the world's third-largest re-export hub. Dubai alone handles over $180 billion in annual re-exports. For UK and Canadian importers sourcing from the Gulf, AED is a workhorse currency — used for everything from commodities to electronics to textiles that pass through Jebel Ali before reaching final markets.

The US Treasury's OFAC has already designated 22 entities based in Hong Kong, the UAE, and Turkey for facilitating Iranian oil sales. The UN Security Council reimposed sanctions on Iran in September 2025, reviving restrictions on petroleum, petrochemicals, gold, precious metals, and financial dealings with designated entities. The UAE's next FATF Mutual Evaluation is anticipated in 2026 — meaning Emirati banks are already tightening compliance controls.

For treasurers, this means three things are happening simultaneously in the AED corridor:

Correspondent banking relationships are narrowing. International banks with US exposure are quietly de-risking their UAE correspondent relationships. Fewer correspondent banks means fewer payment routes, which means wider spreads and slower settlement.

Compliance screening is adding friction. Enhanced due diligence on UAE-routed payments adds processing time. What used to settle T+1 is increasingly stretching to T+2 or T+3 as compliance teams flag and review transactions touching Gulf intermediaries.

The risk premium is being priced into FX. AED is pegged to the dollar, so you won't see it in the exchange rate. You'll see it in the spread your bank charges, the settlement timeline, and the additional documentation requirements that add operational cost to every transaction.

Turkey: The Corridor Caught in the Crossfire

Turkey sits in an extraordinarily awkward position. Bilateral trade with Iran reached roughly $10 billion in 2024. Turkish firms have deep commercial relationships across the Iranian border. Ankara has consistently opposed US sanctions on Iran, arguing they harm ordinary trade more than they change Tehran's behaviour.

Now Turkey faces a potential 25% US tariff on its own exports simply for maintaining those relationships. The Turkish Lira, already one of the most volatile major currencies, faces additional pressure from this geopolitical squeeze.

For companies with TRY exposure — particularly those in textiles, automotive parts, steel, and food processing — the risk isn't just currency volatility. It's counterparty risk. Turkish banks processing payments that touch any entity with Iranian connections, however indirect, now face potential US enforcement action. OFAC's recent designations included Turkish entities by name.

The practical impact: your Turkish supplier's bank may start refusing certain payment routes. Wire transfers that previously cleared without issue may require additional documentation. And the cost of hedging TRY exposure — already elevated — will factor in this new layer of geopolitical risk.

China's De Minimis Shock: A Different Problem, Same Currency

Running parallel to the Iran-linked tariffs is the ongoing restructuring of how Chinese goods enter the US market. The elimination of the de minimis exemption — which previously allowed packages under $800 to enter duty-free — has imposed a 54% tariff on Chinese small parcels, with a $100 flat fee alternative.

This has already devastated platforms like Shein and Temu, which built their business models on tax-free direct-to-consumer shipping. Temu has halted direct China-to-US shipments entirely, pivoting to domestic US sellers.

But the ripple effects extend far beyond e-commerce. The de minimis closure is fundamentally repricing CNY corridors for any business that relied on the exemption for small-value commercial shipments — spare parts, samples, components, prototypes. These low-value shipments were the invisible plumbing of just-in-time supply chains. Now they carry 54% duties.

For treasury teams managing CNY exposure, the calculus has shifted. More Chinese trade is being rerouted through intermediary countries — exactly the kind of transshipment that draws US Customs scrutiny and creates new, unfamiliar currency exposures (Vietnamese Dong, Malaysian Ringgit) that most corporate hedging programmes aren't designed for.

The Compounding Effect: When Sanctions Meet Tariffs Meet Currency Risk

Here's what makes this moment genuinely dangerous for treasury operations: these aren't isolated policy actions. They're compounding.

A UK manufacturer sourcing components from a Turkish supplier who sources raw materials from a UAE intermediary who may — three layers back — have tangential Iranian exposure now faces: potential secondary tariff risk on Turkish imports to the US, enhanced compliance screening on UAE-routed payments, OFAC designation risk on entities anywhere in their payment chain, and currency volatility across three corridors (TRY, AED, and potentially IRR-adjacent pricing) simultaneously.

No single one of these risks would require a treasury restructure. Together, they create a corridor that is materially more expensive, slower, and riskier than it was six months ago — even if nothing about the underlying trade has changed.

The Castellum.AI sanctions review puts it starkly: 57% of Iran-related sanctions in 2025 targeted parties located in third countries — China, UAE, Marshall Islands, India. The enforcement apparatus is explicitly designed to reach into the corridors your payments travel through, not just the sanctioned country itself.

The Unicorn Currencies Playbook: 4 Moves for Sanctions-Exposed Corridors

1. Map your secondary exposure. Your company may not trade with Iran, but do your suppliers' banks? Does your payment route through a correspondent bank with Iranian entity exposure? Most treasury teams cannot answer this question. In 2026, you need to be able to.
2. Diversify your Gulf payment routes. If all your Middle Eastern payments route through UAE-based correspondents, you have concentration risk. Consider direct payment rails through Oman, Bahrain, or Saudi Arabia for non-UAE trade — these corridors carry lower sanctions-adjacency risk.
3. Reprice your TRY hedging for geopolitical risk. Standard TRY forward contracts don't price in secondary tariff risk. If you have material Turkish exposure, your hedging strategy needs to account for the scenario where a 25% US tariff on Turkish goods triggers a Lira sell-off that compounds your existing currency position.
4. Audit your CNY small-shipment flows. If you were routing component samples, spare parts, or low-value commercial shipments through de minimis, those flows are now carrying 54% duties. Consolidate small shipments into larger formal entries where possible, and consider whether rerouting through bonded warehouses in Malaysia or Vietnam reduces total landed cost — while accounting for the new currency exposure that creates.

The Bottom Line

The Iran-linked secondary tariffs and China's de minimis restructuring are being covered as trade policy stories. They're not. They're payment corridor stories.

Every time a government imposes a tariff, tightens a sanctions regime, or restructures a customs threshold, it changes the cost, speed, and risk profile of moving money through the affected corridor. The companies that treat these as "compliance will handle it" problems are the ones who'll discover, six months from now, that their effective FX costs have risen 1-3% across their most important payment routes — and they won't be able to explain why.

The companies that win will be the ones who see tariffs, sanctions, and currency risk as a single integrated problem — and build their payments infrastructure accordingly.

Unicorn Currencies clients: Contact your account manager for a sanctions-exposure corridor analysis.

Not a client yet? Book a 15-minute treasury review — we'll map your corridor risk and show you where the new costs are hiding.