(Not So) Fun Fact: It turns out the penny is not dead yet, as enthusiasts will still be able to purchase the coin in collector sets from the U.S. mint later this year.

Let’s Tariff Peter to Regime-change Paul

What’s Happening: On Monday, President Trump announced via Truth Social that the United States will impose a 25-percent tariff on “any country doing business with the Islamic Republic of Iran.” As there is no executive order, it is unclear if this tariff is officially in place or if its announcement was simply meant to sway companies and countries from importing Iranian products. In either case, this tariff threat comes at a time of increased U.S. pressure on Iran, as that country experiences widespread political protests and internet outages. The White House has stated that to help protect demonstrators, military options including airstrikes are on the table, coming just one week after the U.S. operation in Venezuela.

Why It Matters: As AAF President Douglas Hotlz-Eakin has pointed out, the proposed 25-percent secondary tariff on U.S. trade partners that import from Iran would have major economic implications. In 2023, Iran exported to roughly 119 countries, which account for nearly 90 percent of U.S. imports. A separate 25-percent tariff on each of these countries would amount to $350 billion in additional costs for U.S. consumers and businesses. If U.S.-Mexico-Canada (USMCA) trade agreement compliance is factored in for tariff exemptions, these costs would fall to $250 billion. The tariff could also solely apply to major Iranian trade partners since just 15 countries account for 90 percent of Iranian exports. This would make some sense – Mexico purchased just $11,000 in goods from Iran while China imported close to $5 billion. In this scenario, U.S. tariff costs would fall to $100 billion. Ignoring this massive tax hike and whether it would work to isolate Iran, there are geopolitical ramifications to consider. First, if this tariff stacks on top of other tariffs, the U.S. effective tariff rate would skyrocket and nearly every trade deal the administration has struck would be jeopardized. If President Trump decides to honor the various handshake agreements he has made with trade partners, the scope of this tariff proposal would shrink drastically. Second, and perhaps most important, is that an additional tariff on China threatens to provoke another round in the trade war, which could include critical mineral export restrictions.

Looking Ahead: It is highly unlikely that the president’s threat of a tariff on trade partners that import from Iran will amount to much. Recall that the president’s threat of a secondary tariff on those importing Russian oil never came to fruition. Instead, India was specifically targeted while other countries were left alone. Moreover, the authority used by President Trump to impose this tariff might be taken off the table before an executive order is even drafted. The Supreme Court will soon decide the legality of using the International Emergency Economic Powers Act (IEEPA) to implement tariffs. If IEEPA is struck down, the threatened Iran-related tariff will likely fade into a distant memory.

In Other News

The Wait Continues for an IEEPA Decision: Despite speculation the Supreme Court would release a decision on IEEPA tariffs this week, it has once again delayed a final ruling. The next decision day could be as early as next Tuesday or Wednesday, although it is becoming increasingly unclear whether an IEEPA decision will be released this month. Prediction markets suggest the chances the Court rules in favor of the president’s use of IEEPA to impose tariffs stand at 33 percent, a 6-percentage point increase since the Court’s delay on January 9. The longer it takes for a final decision to surface, the longer uncertainty will remain for U.S. businesses and global markets.

Metal Prices Rise: Since the final Shipment of 2025, silver, gold, and now copper prices have risen at a rather alarming rate (considering that the price of precious metals often rises due to political instability). Over the course of the last year, silver is up almost 190 percent, gold almost 75 percent, and copper roughly 40 percent. This is due to a combination of issues, including trade restrictions, production shortfalls, investor demand over spiraling debt concerns, and industrial demand coming from data centers. Notably, China’s silver export restrictions imposed on January 1 have completely bifurcated the silver market in two ways. The first is the drastic separation between silver contract prices and physical silver prices. On paper, silver is trading around $93 an ounce, while physical silver bullion trades at a far greater premium at closer to $107. This higher premium has materialized in secondary markets where silver bullion is rapidly selling out of stock and has forced the U.S. mint to pause the sale of American Silver Eagle coins entirely. The second shift is the separation between Chinese silver prices and the rest of the world. Silver traded in Shanghai has been priced well above $100 for days, and was most recently at $105 – a significant divergence from the United States. Meanwhile, physical silver coins minted in China are selling for nearly $130 an ounce, indicating that U.S. prices may continue to skyrocket. While this may be great news for investors, it is quite worrisome for U.S. companies that require silver for manufacturing electronics and building data centers. Copper prices are seeing a similarly strange divergence, possibly as a result of the U.S. tariff on copper imposed early last year. Physical copper bullion is selling out in secondary online markets, but paper contract prices have yet to catch up. This may put added cost pressure on data centers that require tons of copper for construction.