After Iran's test missile launch last week, Donald Trump has been an advocate to impose further sanctions on the country which could be detrimental for the $8bi deal to sell 80 Boeing jets to Iran Air settled during the Obama administration.
In 2015, the P5+1 (the group of world powers representing the permanent members of the United Nations Security Council - US, UK, Russia, France, and China, plus Germany) together with the European Union, came into agreement with the Republic of Iran to craft a nuclear deal plan (the Iran Nuclear Deal) aiming to have the Islamic nation "redesign, convert, and reduce its nuclear facilities [...] in order to lift all nuclear-related economical sanctions [...]."
Due to the agreement, however, Boeing was able to go through with the implementation of the accord. It has not been secured, but details had been sorted out and it was only a matter of time. Nevertheless, things might derail under the order of U.S.'s 45th president. Donald Trump has expressed severe criticism over the Iran nuclear deal and his latest "feat" regarding the immigration travel ban imposed on seven Muslim-majority countries - Iran being one of them - could be a good enough reason for the middle-eastern nation to cancel the arrangement. If not enough, after last week's nuclear tests, the president-elect is willing to impose further sanctions on the country, which can complicate the performance of the transaction. These aren't a definite formula for failure in regards to the Boeing deal, but Iran will be faced with more motivations to not go through with it.
In turn, this would mean a significant loss for the US manufacturing jobs; Boeing and its main suppliers, GE and UTX, are "major US employers". The aerospace company has said, at the time the $8bi deal was proposed, that it would lead to 100,000 employments given the order size. Even though the association is heavily relied upon and that new purchases can come about regularly at any point in time, it has proposed a "trimming" of jobs in 2017 due to fierce competition from their main rival, Airbus. and a drop in orders.
The European company, Airbus, has a similar deal with Iran, projecting a sale of $10bi for 100 Airbus jets to be sent to the country. This arrangement could also be hurt if Trump proceeds with these new sanctions because Airbus relies on mostly US manufactured parts - meaning US's approval is required for the sale.
In conclusion, this decision will create a snowball effect: further imposed sanctions will demotivate Iran on going through with the deal, it will increase their difficulties in utilizing western banks to finance the purchase, European Airbus will rely less on American manufactured parts, and all of this would lead to a harmful impact on the manufacturing jobs of people who rely on these transactions and even more on these companies.
http://money.cnn.com/2017/02/03/news/companies/trump-iran-boeing-sale/index.html?iid=Lead
https://en.wikipedia.org/wiki/Iran_nuclear_deal_framework
3 comments:
The new ban put into place by Trump has created a lot of backlash and only time would tell what effects it would have other than on immigration. This seems to be one of the bigger consequences from the executive order. Iran doesn't want to trust the US now and won't do any type of business. And now this executive order might cost the US jobs.
I find it interesting how many of Trumps policies that exclude other countries and immigrants put a big hurting on business too. It is interesting to see how interrelated inclusivity are with US success in business. The global economy is so big that by limiting our business to mostly within the US simply impacts our business while other foreign players can simply go elsewhere and are often not as impacted.
The immigration policy was born out of poor planning and a lack of understanding of foreign relations. Obama and John Kerry set up a deal with Iran that in theory would help keep Iran quiet on the nuclear front. With Trump's insistence on starting fights with many international leaders, countries like Iran are bound to reignite their nuclear program to fight against the bully that is Trump. Trump doesn't understand that the Obama deal not only reduced Iran's nuclear program motivations, but it was also helping their economy which was in dire shape.
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