Bilateral trade between Iran and the European Union has been under persistent pressure in recent years, affected by a combination of economic sanctions, banking restrictions, and domestic instability.
The latest data from Eurostat shows that trade between Iran and the EU fell to €3.717 billion in 2025, an 18% decline compared to the previous year. Imports from the EU dropped 20% to €2.967 billion, while Iran’s exports to the EU totaled €750 million, down 11% from 2024.
Germany, Italy, and the Netherlands were Iran’s largest EU trading partners in 2025, although trade with Germany alone fell 20% to €1.18 billion. The International Affairs Department of Iran’s Chamber of Commerce, relying on official Eurostat data, noted that the decline in Iran’s exports and imports with the EU has stabilized but remains heavily skewed in favor of European countries.
Ahmad Pourfallah, President of the Iran-Italy Chamber of Commerce, told Donya-e-Eqtesad that the root causes of declining trade lie in political interpretations of economic activity. “All past conflicts have economic roots. In our country, the economy is often viewed through a political lens, which leads to the exclusion of some markets and preferential treatment of others for political reasons,” he explained.
He added, “The EU has always been a diverse and significant market for us and could play a decisive role in our economy’s future. However, if the current trajectory continues, Iran’s relations with most countries will deteriorate year by year.”
The structure of goods trade shows that Iran primarily exports food, agricultural products, raw materials, and industrial goods to the EU. Imports from Europe mainly include machinery, industrial equipment, and chemicals.
According to the Chamber of Commerce, services trade is a bright spot: in 2023, services accounted for €1.68 billion, or 37% of total trade with the EU, indicating potential for expansion even amid crisis.
Mehdi Miremadi, President of the Iran-France Chamber of Commerce, highlighted the role of sanctions on banking. “Any bank dealing with Iranian counterparts is subject to US sanctions. These restrictions make trade with EU countries increasingly difficult,” he said.
He added, “Trade costs with Europe have risen sharply due to sanctions, and importers often prefer to source goods from cheaper markets such as China.”
Broader Consequences
The broader consequences of declining trade include reduced European direct investment, rising transaction costs, and constrained access to supply chains.
To address these challenges, the Iranian Chamber of Commerce has recommended expanding trade offices, strengthening economic diplomacy, developing alternative financial systems such as barter or local currencies, and focusing on resilient service exports and industries. Diversifying EU trading partners and leveraging regional networks could also create strategic opportunities.
Pourfallah stressed the importance of restoring trust and optimism in society and attracting both domestic and foreign investors. “We must engage with the world without prejudice and in a win-win approach. Foreign investment can boost production and exports, paving the way for improved trade relations with Europe,” he said.
The continuous decline in Iran-EU trade results from a combination of sanctions, domestic political choices, and global crises. Nevertheless, smart economic management, active diplomacy, and service sector development could mitigate some of the decline and help redefine Iran’s future trade relationship with the European Union.
