The United Arab Emirates said it is halting all trade and financial transactions with Iran, adding further economic pressure on the Islamic Republic as the Trump administration pushes to isolate it.
The decision, announced soon after the Emirati government accused Iran of launching missiles toward its territory, was made “in light of regional escalations that undermine regional and international peace and security,” Afra Al Hameli, a spokeswoman for the Emirati Foreign Ministry, said in a statement late Tuesday. She added that the Emirates was “firmly committed to safeguarding the integrity of the international financial system.”
The Emirates, located just 50 miles from Iran across the Persian Gulf, has nurtured close economic and cultural ties with the Islamic Republic for decades, despite political tensions between the two countries.
Iranian-Emirati trade was worth roughly $28 billion in 2024, when the Emirates was Iran’s largest source of imports — ferrying electronics, precious metals and other goods to the Islamic Republic — according to World Trade Organization data.
Analysts say that trade through Dubai, the Emirates’ largest city, has long been key to Iranian efforts to evade sanctions, eliciting complaints and pressure from American authorities in the past. Emirati officials say that they crack down on any sanctions violations when they find them.
The Trump administration has been keen to increase economic pressure on Iran while trying to find a resolution to the nearly six-month war — which has left Iran with significant control over shipping in the Strait of Hormuz, the narrow waterway that is a key transit route for oil and gas. Last week, Scott Bessent, the U.S. treasury secretary, threatened to “apply measures like have never been seen in the history of the economic isolation” of a country.
It is unclear if the United States played a role in the Emirates’ decision to halt trade with Iran. The announcement came hours after a call from President Trump to the Emirati leader, Sheikh Mohammed bin Zayed.
And in a separate call on Tuesday, Secretary of State Marco Rubio and Sheikh Tahnoon bin Zayed, the Emirati national security adviser, discussed efforts to hold Iran accountable for ongoing attacks, according to a State Department spokesman, Tommy Pigott.
The Emirati foreign ministry did not respond to a request for comment about the motivation and timing of the decision.
It is also unclear how seriously and swiftly the Emirati government will move to enforce a suspension of economic ties.
Esfandyar Batmanghelidj, chief executive of the Bourse & Bazaar Foundation — a London-based think tank focused on Iran’s economy — expressed skepticism, saying the announcement does not necessarily indicate a change in policy. Instead, it could be read as “a moment of public diplomacy” directed at the United States, intended to signal that the Emirates is “continuing to keep Iran at an arm’s length,” he said.
In reality, Iran and the Emirates continue to be economically interdependent, Mr. Batmanghelidj said.
In Dubai’s spice market — beside a bustling creek where wooden boats have ferried shipments to and from Iran for decades — traders told a New York Times reporter that the war had already disrupted the once-steady flow of Iranian goods into Dubai.
Mohammed, a spice trader who has been in the business for more than 25 years, said that he is still able to bring in saffron and dried fruits — which he re-exports to countries including China, India and Saudi Arabia — but at a higher cost and with greater difficulty. Since the war broke out, shipments are often subjected to additional scrutiny at customs, he said.
The new announcement has increased uncertainty for businesspeople, Mohammed said, expressing hope that the two countries could learn to coexist and that the current tensions would fade.
He spoke on the condition that his full name be withheld to protect him from retaliation by the government.
The Emirati government statement did not make it clear when the decision to halt trade was made or specify what prompted it. But last week, the Emirates accused Iran of attacking an Emirati oil tanker traveling through the Strait of Hormuz.
On Tuesday, the Emirati Defense Ministry issued warnings of an incoming missile attack, later saying that two ballistic missiles launched from Iran had targeted maritime navigation, and that one had fallen in Emirati waters. Iran denied carrying out those attacks, and has neither denied nor claimed responsibility for the recent tanker strikes.
Before the United States and Israel attacked Iran in February, setting off a regional conflagration, Emirati officials had been pursuing a strategy of diplomacy and economic engagement with Iran — their much larger neighbor — hoping that would insulate the Emirates from any conflict.
The war shattered that assumption, and ties between the Emirates and Iran rapidly soured as the Emirates, which hosts a major American military base, bore the initial brunt of Iran’s retaliation, reporting more than 2,700 ballistic missile and drone attacks from Iran.
In March, the Emirati government ordered the closure of a historic Iranian Hospital in Dubai, as well as a cultural club and several schools — all of which officials said were connected to Iran’s government. The Emirati government also began revoking the visas and residency permits of some Iranian expatriates, stranding many abroad.
Eventually, the Emirati military carried out secret strikes on Iran, according to two current and former senior U.S. officials, who spoke on the condition of anonymity to discuss operational matters.
After the United States and Iran reached a cease-fire agreement in April, and later, a preliminary peace deal in June, tensions between the Emirates and Iran eased significantly, with direct contact between senior officials and the resumption of flights between the two countries.
As the truce has frayed in the months since, Iran largely focused its attacks on nearby Bahrain and Kuwait, sparing the Emirates.
Still, Emirati officials have doubled down on their ties with Israel and the United States, viewing those relationships as essential to the Emirates’ security as a small country in a tumultuous region.
The recent attacks on Emirati oil tankers elicited a strong condemnation from the Emirati government, and on Saturday, the Emirati Foreign Ministry accused Iran of targeting shipping in the Strait of Hormuz as “a tool of economic coercion or blackmail” that constituted a “direct threat to the stability of the region.”
Mr. Batmanghelidj said that he expects the Emirates will continue a policy of “hedging,” balancing relationships with both the United States and Iran.
Despite his country’s dependence on the United States, Sheikh Mohammed, the Emirati leader, has carved out a role as a powerful and quasi-independent operator in the Middle East over the past decade.
“They have managed to demonstrate significant strategic autonomy,” Mr. Batmanghelidj said. “The U.A.E. is not a country that is going to allow its national interests to be determined by policy choices made in Washington.”
Anjana Sankar contributed reporting from Dubai and Sanam Mahoozi contributed reporting from London.