Blink and miss: Trump’s tactic of threats first and U-turn later is proving stale in Iran war | US economy
From Wall Street to the White House, the dish everyone’s talking about this week is the Persian Taco. This is what is presented when Trump hesitates in Iran.
Early Monday morning saw oil prices soar, while stock futures fell and bond yields rose due to Trump’s threats. Dismantling Iran’s civilian energy infrastructureThe president hastily backtracked and announced that he would postpone the bombing because talks with Iran were actually going great. After the bombing and bloodshed, it was Taco’s turn (Trump Always Brings Out Chicken), a move he first showcased during the tariff crisis last year.
Bonds immediately retreated and the price of Brent crude fell below $100 per barrel 112 seconds earlier. As of 9.30 am in New York, the S&P 500 index increased by 1.5 percent, challenging futures contracts that had previously signaled a daily decline of 1 percent.
Perhaps we should thank Trump for stopping American forces before they committed a war crime and initiating an inevitable tit-for-tat fight with Iran to blow up civilian infrastructure around the Gulf; It will deal a heartbreaking blow to the global economy that will put financial markets in a deadlock.
But events in the hours after the president presented his Mexican-Middle Eastern fusion meal suggest that his tactic may have succeeded. It may still cause great damage to the region and the world economy. Making extreme threats and pushing back on them will once again give Trump the illusion of agency. However, he can no longer control events in Iran. He cannot decide when the conflict will end. Markets think this will most likely depend on Tehran.
Oil rebounded on Tuesday and stocks lost most of Monday’s gains after Iranian officials denied “productive talks” that Trump claimed were taking place “concerning a complete and total resolution of our hostilities” and sent waves of missiles at Israel, Iraq and other American allies in the Gulf.
Although markets were trading late Tuesday in Washington He sent a peace plan to IranInvestors have since spooked again as they realized the president’s words didn’t mean much.
This isn’t the first time markets have felt Trump’s power to shape events is diminishing. On March 9, the president had another Taco incident and tried to stop rising oil prices by claiming that the conflict would end”soon, very soon“because the war was “almost complete.” The S&P index rebounded that day but continued its rapid decline.
In April of last year, on “liberation day” when the Taco trade was christened, Trump was roughly in control of events. He announced that he was imposing “reciprocal” tariffs on imports from every piece of land in the world, including penguin-only islands. The markets were in turmoil. So he stepped back to calm the markets.
There was no major damage to the economy. In the following months, as Trump re-raised tariffs against groups of countries in a more gradual and piecemeal manner, markets reacted more calmly, especially as the damage (to growth and inflation) from his maneuvers appeared to have abated. The dollar lost value but the stock market recovered.
Trump now faces a more challenging picture. The November midterm elections are approaching and he is underwater in the polls. Americans disapproved of this war from the beginning, and their opposition grew as the average price of gasoline at the pump rose to almost $4 per gallon. OECD estimate Inflation in the USA is predicted to rise to 4.2 percent this year. The challenge for Trump is that his goals are contradictory. He desperately needs to end the war and bring the fleet home. And it needs to urgently remove the obstacle to oil supplies through the Strait of Hormuz, which Iran now controls.
Iran, on the contrary, has time. Its leadership was already fragmented. His army was devastated. But the regime remains in control and there is little indication that it will be removed from power. As we have seen, it has the capacity to impose huge costs on the world by constricting the strait and depriving the global economy of 12.5 million barrels of oil and 11.5 billion cubic feet of gas per day.
Tehran’s willingness to back down is minimal. He’s probably calculating that the only way to prevent future attacks is to show how much damage he can do in response. And there’s nothing the US can do about it, which would cause additional political problems in Washington.
In fact, Iran reportedly responded to Washington’s peace proposals by putting forward some of its own demands, including recognition of Iranian sovereignty over the Strait of Hormuz and compensation for damage caused by American and Israeli attacks. Iranian state television Press TV, reportedly quoted A senior official says: “Iran will end the war when it decides and its terms are met.”
Markets are starting to understand this. If the US were in control of everything, Trump would not be threatening to bomb civilian targets, which is a war crime. At best, for the president, this means that Iran has weakened all of its military objectives and doesn’t know what else to do. At worst, it means he can’t figure out how to get them off.
On Thursday, the S&P index closed the year at a new low, losing 1.78%. The barrel price of Brent crude oil was hovering around $108 in the afternoon. Like Trump, investors were surprised to discover that after the assassination of its leader and the disintegration of its armed forces, Iran emerged deadlier than before, more determined to endure and cause more destruction. Trump’s Persian Tacos may not be enough to calm his nerves.
