Iranian industries would loose a big market in Iraq after the U.S. reimposed sanctions against Iran this week.
Trade between Iraq and Iran stood last year at around $6.7 billion, including only $77 million worth of Iraqi exports to Tehran, according to a source in the ministry of trade.
Muzhar Mohammed Salah, an economic adviser to Iraq's prime minister, told Agence France Presse that the US sanctions will also affect the Iraqi economy.
"The two or three million Iranian pilgrims who come each year represent a major economic activity that Iraq could now be deprived of," he warned.
Washington slapped unilateral sanctions back on Tehran on Tuesday, after pulling out of a landmark 2015 nuclear deal in May.
"To comply with the American sanctions, we've stopped imports of Iranian cars," said a senior Iraqi official in the auto import industry.
The official, who asked not to be named, said Baghdad had asked for an exemption from Washington to allow imports of Iranian spare parts for car assembly facilities in Iraq.
Production has ground to a halt with 5,000 jobs on the line, he said.
Yassin Faraj of the chamber of commerce in Sulaymaniyah, an Iraqi Kurdish province bordering Iran, told AFP smugglers could use several unofficial crossing points.
He also forecast that tougher U.S. sanctions on Tehran would spark "an influx of Iranian workers", especially to the autonomous Kurdistan region.
This article has been adapted from its original source.
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