Iran’s trade with the European Union has continued to contract, underscoring the depth of structural and geopolitical pressures shaping one of Iran’s most important external economic corridors.
According to the latest Eurostat data, Iran–EU trade fell 18% year-on-year in the first nine months of 2025 to €2.82 billion, down from €3.47 billion a year earlier. EU exports to Iran declined 21% to €2.23 billion, while imports from Iran slipped 6% to €587 million.
The long-term picture is even more striking. During the post-JCPOA opening in 2017, bilateral trade surged to €21 billion—its highest level in a decade. But by 2024, total trade had collapsed to roughly €4.5 billion, effectively wiping out the gains made during the nuclear-deal years.
In an interview with Donya-e Eqtesad, Shahin Asghari, president of the Iran–Germany Chamber of Commerce, emphasized that despite recurring political crises, the relationship has historically shown resilience. “Over several decades, trade between Iran and Europe has been like a bridge—sometimes crowded, sometimes quiet, but never destroyed,” he said.
He noted that Europe, particularly Germany, long served as Iran’s main supplier of machinery, pharmaceuticals and advanced industrial technology.
Trade rebounded rapidly during the JCPOA period, rising from €13.7 billion in 2016 to €20.6 billion in 2017. “But with the return of US secondary sanctions in 2018, everything reversed,” Asghari said.
Structural Pressures
Asghari pointed to a combination of factors driving the persistent downturn.
The reimposition of US secondary sanctions forced European firms to choose between access to the US market and continued engagement with Iran—a calculation that overwhelmingly pushed companies to withdraw.
Severe banking disruptions followed, as most European financial institutions refused to process even humanitarian-exempt transactions. “Payments that should have taken days now take months, if they happen at all,” he said.
He added that domestic uncertainty inside Iran—including exchange-rate volatility, frequent regulatory shifts and inconsistent business rules—further discouraged European suppliers and investors.
The collapse of crude oil exports to Europe, once the backbone of bilateral commerce, removed the most significant anchor of trade volumes. “When oil exports stopped, the main pillar of cooperation disappeared,” Asghari explained.
Beyond declining volumes, Asghari argues that the deeper impact is technological. Europe has been Iran’s primary source of high-tech industrial inputs for decades.
The erosion of ties slows modernization, raises the cost of technology acquisition and limits participation in global value chains. “Restricted ties don’t just cut trade—they increase the cost of development,” he said.
Germany remains Iran’s biggest European partner, but at sharply reduced levels. Bilateral trade, which reached €3.4 billion at its JCPOA peak, now hovers near €1.5 billion.
Still, Asghari believes the underlying industrial and commercial foundations remain intact. “If political conditions improve, Germany is among the few partners capable of rebuilding a major economic bridge quickly,” he noted.
Pivot to Asia
Iran, meanwhile, has expanded its engagement with China, Russia, India and neighboring states. These ties have offset some losses but cannot fully replace Europe’s role in technology transfer and industrial upgrading.
Asghari stressed that while Asia offers scale, Europe offers depth. “For a real industrial leap, cooperation with Europe remains essential,” he said.
Looking ahead, the outlook remains constrained. With geopolitical tensions elevated and UN Security Council sanctions reactivated, a significant rebound appears unlikely in the short term.
But long-term structural needs—Europe’s demand for regional stability and Iran’s need for technological renewal—keep the door open to eventual recalibration. Until then, Iran–EU trade is set to remain limited and tactical rather than strategic.
