British business warns of 'chilling' effect of Trump's Iran sanctions threat

British business warns of 'chilling' effect of Trump's Iran sanctions threat

British business warns of 'chilling' effect of Trump's Iran sanctions threat

President Donald Trump's long-anticipated decision to pull the USA out of the Iran nuclear deal and reimpose sanctions on the Islamic Republic will have a swift effect on some big companies.

According to The Washington Post, the two companies had signed agreements with Iran Air and Aseman Airlines, deals that will no longer be valid.

In December 2016, Airbus signed a deal with Iran's national carrier, IranAir, to sell it 100 airplanes for around $19 billion at list prices.

Airbus is particularly more exposed on widebody jets, for which sluggish global demand has forced it to revise down part of its production plans; Iran has ordered 53 widebody jets from Airbus and 30 from Boeing.

Shares of Boeing closed down $2.06, or 0.6 percent, at $338.37 on the New York Stock Exchange after Trump's announcement.

And while new contracts are re-banned, companies and banks will have 90 days or 180 days to wind down their ties before risking penalties. The European planemaker is subject to USA export restrictions to Iran because more than 10 percent of the parts on its jets originate with US companies such as United Technologies Corp., Rockwell Collins Inc. and General Electric Co. All the deals are dependent on U.S. licences because of the heavy use of USA parts in commercial planes. "These are very, very strong sanctions; they worked last time".

He said there might be some exclusions, but he did not elaborate.

With the US exiting the Iran deal, American companies are set to lose big bucks, keeping them from being able to grow the American economy. A Chinese oil company also has a deal to develop the country's massive South Pars offshore natural gas field.

The sanctions on oil purchases will be the same as under the administration of former President Barack Obama. "The objective is to put and maintain maximum sanctions on Iran; that is the objective here".

Airbus, which is subject to the USA license because it makes at least 10 percent of its aircraft components in the US, says it will abide by the new USA sanctions but it could take "some time" to determine the full impact on the industry.

Other leading USA aerospace firms posted gains - partly due to expectations for increased defense spending, and partly as a reaction to last week's defense-stock selloff.

Iran's supreme leader Ayatollah Ali Khamenei on Wednesday that Tehran would quit the landmark 2015 nuclear deal unless European signatories offered solid guarantees that trade relations would continue even after the United States' withdrawal from the pact. But he soon turned against the agreement when it became clear that many of its benefits were still being blocked by the remaining US sanctions.

"My expectation is not that oil prices go higher", he said.

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