Hooman Majd explains why Trump’s expected designation of Iran’s IRGC as a terrorist organization would be so dangerous:

Designating the IRGC as a terrorist organization, however, would have immediate and potentially disastrous effects that could reverberate across the Middle East. It is, after all, a branch of the armed forces of a U.N.-member nation and one that has shown little hesitancy to strike back at whoever threatens it or the Islamic Republic.

If Trump does label the IRGC a terrorist group, Iran’s government will see it as an extremely hostile act and may consider it a prelude to an attack on its forces. It is very risky to start labeling part of another state’s armed forces as terrorists, since it creates a pretext for starting an unnecessary war. If their forces are labeled as terrorists, they will then have every incentive to treat our forces in the same way. Since U.S. and Iranian forces are operating in Syria and Iraq at the same time and are sometimes in close proximity to one another, the administration would be foolish to stoke tensions with this designation.

The response from Iran so far has been extremely negative:

“We are hopeful that the United States does not make this strategic mistake,” Foreign Ministry spokesman Bahram Qasemi was quoted as saying by the state news agency IRNA.

“If they do, Iran’s reaction would be firm, decisive and crushing and the United States should bear all its consequences,” he told a news conference reported by IRNA.

Designating the IRGC would be a huge gift to hard-liners in Iran, who would cite it as proof of Washington’s hostile intentions against the country. It would also make it virtually impossible for U.S. and other firms to do business in Iran without exposing themselves to legal penalties. Majd continues:

It is difficult to certify that any particular business in Iran is not linked in some way, however minor, to the IRGC or an IRGC-controlled entity or even just to former IRGC officers. If the IRGC becomes a “foreign terrorist organization,” it will become illegal for any company doing business with it to do business in the United States. Mike Pompeo, the current CIA director, made this very point in these pages before he was appointed to his post by President Trump.

Like other ham-fisted sanctions measures, this one will cause most Iranians to side with their government and the crisis atmosphere it would likely create will make it that much harder for reformers to make any progress inside Iran. Meanwhile, ratcheting up tensions with Iran makes it that much more likely that an accident in the Gulf or a skirmish between U.S. forces and pro-regime forces in Syria or a clash with militias in Iraq could rapidly escalate into a much larger conflict. The U.S. shouldn’t be courting a new war in the region, especially when it has not yet concluded the current one. If Trump’s advisers have any sense, they will convince Trump not to go through with the designation.