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That the US pulls out of the nuclear deal with Iran will mean that US sanctions are reimposed upon US companies. That’s generally how domestic law works of course. But it will also mean that pretty much everyone else – other than say North Korea and the like – also have to obey US sanctions. There’s a lot of spluttering about this over here in Europe but that is in general the way that things will work out. Quite simply because most world trade is conducted in dollars, those are cleared through the US, so the US has pretty much a veto on world trade.

President Trump has been criticized for lacking even a shred of cohesion in his decision making, but there has been one unifying theme over his first 15 months in office: torching the legacy of Barack Obama. The latest of his predecessor’s accomplishments set for incineration is the Iran deal, which Trump announced plans to abandon today. The withdrawal comes after months of campaigning from experts, administration officials and the international community to preserve the deal, which Trump has been decrying as “one of the worst” ever since the 2016 campaign. The president wasn’t swayed, remaining convinced he can renegotiate a better arrangement despite Iran’s refusal to do so.

That’s the background. This is some bluster:

Britain has “no intention of walking away” from the Iran nuclear deal despite the United States pulling out, Foreign Secretary Boris Johnson says.

Mr Johnson told MPs the UK would “strive to preserve the gains” made by the international agreement.

And here’s the economic effect:

The United States plan to reimpose sanctions on Iran could also spill over to European firms and others doing business in Iran — possibly raising risks for their U.S. access to the much larger U.S. market.

Moments after Trump’s decision, Treasury Secretary Steven Mnuchin told reporters that these Europe-Iran business agreements will be voided. “The existing licenses will be revoked,” he said.

In Germany, the U.S. ambassador, Richard Grenell, said via Twitter that “German companies doing business in Iran should wind down operations immediately.”

One obvious point being that if you want to do business in the US then you’d better be obeying US law. And it really isn’t possible to be trading with Iran on those normal terms and still do business in the US as a result. But it is actually worse than this. Pretty much all global trade takes place in US dollars. US dollar deals are cleared through banks in New York. Thus any dollar trade comes under those US sanctions – or at least that’s what the US itself insists.

Great, so we’ll all go and trade in Yen, or euro, dinars! But which banks out there don’t have a dollar business which clears through New York? Perhaps entirely officially just doing the trade not in dollars would be enough. In practice it won’t be. There would be, at the very minimum, some huffing and puffing and comments about “Nice US banking licence you’ve got there, be a pity if anything happened to it.” Maybe that shouldn’t even happen – but it would.

That’s really the biggest problem about Trump’s withdrawal as well. It’s that US law, the dollar, are so entwined into the international trade arena that everyone needs to follow those sanctions, not just Americans.