Iran loosens import restrictions on foreign cars and iPhones, trying to mask its economic woes

TEHRAN, Iran — All architecture student Amirhossein Azizi wanted for his 19th birthday was the latest iPhone — and for Iran's cash-strapped theocracy, it was just the gift they needed as well.

Just buying a top-of-the-line iPhone 16 Pro Max in Iran's capital cost him on the day 1.6 billion rials ($1,880). An additional 450 million rials ($530) is required for import fees and registration on government-managed mobile phone networks.

''I'm very happy to own one of the most expensive phones in the country," Azizi said. His father, Mohammad, laughed nearby and added: ''Maybe if they had to earn the money themselves, they wouldn't be so quick to spend it.''

The purchase is only possible after Iran lifted import bans on expensive goods like foreign cars and new iPhones, yielding to public demand for the products while also trying to mask the dire straits of its economy.

While being described as a way to boost Iran's much-vaunted ''resistance economy," the decisions trapped Iranians into buying more affordable locally produced vehicles long derided as ''death wagons'' and boosted the prices of aging, second-hand iPhones.

They also provide Iran with much-needed tax revenues as its government struggles under international sanctions over its nuclear program. Uncertainty over how U.S. President Donald Trump will deal with Iran also has put pressure on its rial currency, which sits at record lows against the dollar.

Powerful forces within Iran long have been believed to be taking advantage of the sanctions, while those benefiting may just be among the country's most well-off citizens.

"It's more about perception than reality,'' Iranian economist Saeed Leilaz said.

‘Resistance' economics at play

Iran's Supreme Leader Ayatollah Ali Khamenei, now 85, first proposed the idea nearly 15 years ago as Tehran faced its first round of intense sanctions over its nuclear program, which the West fears puts the Islamic Republic at the precipice of obtaining an atomic bomb. Iran maintains its program is peaceful — even as it enriches uranium closer than ever to weapons-grade levels.

''Sanctions are not new for us," Khamenei said in a 2010 speech. "All achievements have been made and all the great movements of the people of Iran have been launched while we were under sanctions.''

In some ways, it's worked for Iran's ruling clerics since Trump unilaterally reimposed sanctions on Tehran after withdrawing America from the 2015 nuclear deal. Iran struck deals with China to continuing buying its crude oil, likely at a discount.

Those in Iran's paramilitary Revolutionary Guard, which has grown into a major power center under Khamenei, handle the sales — both funding their operations against Israel during the Israel-Hamas war in the Gaza Strip and creating a new wealthy elite loyal to Khamenei.

But for the average person, there's clearly a before and an after for the life under the nuclear deal, which saw Iran agree to drastically limit its enrichment and overall stockpile of uranium.

At the time of the deal, the Iranian rial traded at 32,000 to $1. A decade later, $1 is worth 928,500 rials. The public's savings have evaporated, pushing average Iranians into holding onto gold, real estate and other tangible wealth. Others pursue cryptocurrencies or fall to get-rich schemes.

Iran lifts car and iPhone import restrictions, seeking cash

Iran banned the import of foreign cars in 2017, while not allowing iPhones newer than the 13 to be registered on the country's mobile phone networks. The phone decision set off a scramble for older iPhones, boosting their price, while used car prices for foreign models remain high as well.

In the last Persian year ending in March 2024, Iran imported $3.2 billion worth of mobile phones, customs data shows. The cut for high-end iPhones makes them a lucrative option to plug some of the gaping holes in Iran's government spending — though Iran's foreign currency reserves remain low due to sanctions.

''Lifting restrictions on a few platforms or allowing iPhone imports are the kinds of steps the government can take quickly and with minimal cost to create a sense of progress,'' said Leilaz, the economist.

Such decisions also provide a quick win for Iran's reformist President Masoud Pezeshkian with Iran's elite — though it doesn't address any of the longer-term economic problems.

For cars, former President Hassan Rouhani banned imports of fully built foreign vehicles in 2018, after Trump unilaterally withdrew America from the nuclear deal. While in theory protecting Iranian foreign reserves, it also backed up local automobile manufacturers, whose products have long been criticized for not meeting international safety and quality standards — hence their ''death wagon'' monikers.

Experts believe if Iran's government allowed more lower-priced, higher-quality imports, the country's automobile manufacturers would lose their edge. Restrictions still limit the number of foreign cars that can come into the country and tariffs that Pezeshkian wants lowered may have been again placed at 100%.

''Since the number of newly imported cars is still limited, only a few people can afford them," said Saber, a car dealer in Tehran who spoke on condition only his first name be used to be able to discuss the issue frankly. "As a result, imported cars have skyrocketed in price on the open market.''

What Trump does carries serious consequences for Iran

As Iran's economy worsens, its theocracy worries conditions could again push the public back onto the streets in nationwide protests. That's why officials up to Khamenei have backed the idea of talking again to the West.

While Trump has suggested he wants talks, he signed an executive order Feb. 4 calling for putting ''Iran's export of oil to zero,'' including to China, which buys Tehran's crude at a discount. It also seeks a ''snapback'' of United Nations sanctions on Iran over its nuclear program. If implemented, they could decimate Iran at a time where its people are looking for any sign of optimism.

That includes a car show in Tehran in late January that featured foreign brands like Mazda, Nissan and Toyota, all sought after by Iranians. However, even with the change, Iran's economy still must exist in a world where the U.S. dollar reigns supreme and its rial continues to fall.

''This biggest problem in this country is that everything depends on the dollar," said Saeed Maleki, standing among the vehicles at the show. "Today they tell you a car costs 3 billion rials. But after a week or a month will they still sell this for 3 billion? No! They will charge me with the new rates.''

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Associated Press writers Mehdi Fattahi in Tehran, Iran, and Jon Gambrell in Dubai, United Arab Emirates, contributed to this report.