I have a Terraform configuration targeting deployment on AWS. It applies beautifully when using an IAM user that has permission to do anything (i.e. {actions: [\"*\"],
The method you are attempting is a bit unusual in cloud technology. Instead of giving fine grained control to the terraform user running the API calls, you could run terraform on an EC2 instance with an EC2 IAM profile that allows the instance itself to call the API's with the correct set of AWS service permissions.
Each call is made to a specific API endpoint. Some terraform operations applied during a apply would be different if you pushed an update. You also need to know what happens during a modify operation where a resource is updated in place.
Instead of restricting that API key to specifics, let it have more leeway, if it needs to create and destroy EC2, let it have EC2 full perms maybe with conditionals to restrict to account level or VPC.