Iran's War Reveals a Weakness for Trump: Economic Pressure

Economy SadaNews - Seven weeks of war have failed to topple Iran's rulers or force them to meet all the demands of U.S. President Donald Trump, but for U.S. adversaries and allies alike, it has unveiled one of his main weaknesses; economic pressure, according to an analysis by Reuters.

Even with Iran's announcement yesterday (Friday) that it would reopen the Strait of Hormuz to navigation, the Middle Eastern crisis has exposed the limits of Trump's willingness to bear internal economic pain.

Trump joined Israel in attacking Iran on February 28, citing what he termed imminent security threats, particularly regarding its nuclear program. However, now, with rising fuel prices in the United States, increasing inflation, and dwindling popularity, Trump is racing against time to secure a diplomatic agreement that could alleviate domestic repercussions.

Analysts say that while Iran has suffered a severe military blow, it has demonstrated its ability to impose economic costs that Trump and his aides underestimated, leading to the worst global energy shock in history.

Energy Costs and the Risk of Recession

Trump has often publicly dismissed local economic concerns stemming from the war, especially since the United States is not dependent on a fifth of global oil shipments that have been effectively blocked due to Iran's control over the Strait of Hormuz. However, the rising energy prices have negatively impacted American consumers. The International Monetary Fund’s warning of the risk of a global recession exacerbates this grim situation.

Thus, pressures are mounting to find a way out of this unpopular war in the United States; as members of Trump's Republican Party defend their slim majority in Congress in the upcoming midterm elections in November.

None of this is lost on Iranian leaders, who have exploited control over the Strait of Hormuz to push Trump’s team toward the negotiating table.

Analysts believe that China and Russia might learn a similar lesson; that while Trump has shown a willingness to use military force in his second term, he seeks a diplomatic exit as soon as the economic situation at home becomes distressing.

Brett Bruen, a former foreign policy advisor in the administration of President Barack Obama, now leads the consulting firm Global Situation Room, and stated, "Trump feels the economic distress, which is a weakness in this war."

White House spokesperson Kush D’Souza said that while the administration works to reach an agreement with Iran to resolve "temporary" energy market issues, it has "never lost focus on implementing the President's agenda concerning affordability and growth."

The Shift

Trump's sudden shift on April 8 from airstrikes to diplomacy came after pressures from financial markets and some supporters of his policies.

A portion of the economic hardship falls on American farmers, a key electoral base for Trump, due to disruptions in fertilizer shipments. This is also reflected in increased ticket prices due to rising aviation fuel costs.

As the two-week ceasefire approaches its end, it remains to be seen whether the unpredictable American president will reach an agreement that meets his war objectives, extends the truce beyond April 21, or renews the bombing campaign.

However, global oil prices dropped sharply, while financial markets, often seen by Trump as a measure of his success, surged yesterday (Friday) after Iran announced that the Strait would remain open for the remainder of a separate 10-day ceasefire between Israel and Lebanon, brokered by the U.S.

Trump rushed to declare the Strait of Hormuz safe, praising a pending agreement with Iran that he claimed would be concluded soon and on most of its terms. However, Iranian sources told Reuters that some gaps still need to be resolved.

Experts have warned that even if the war ends soon, the removal of economic damages could take months, if not years.

The main question remains whether any agreement will achieve the goals set by Trump, including shutting down Iran's path to acquiring a nuclear weapon, which Tehran has long denied seeking.

Iran possesses a stockpile of highly enriched uranium believed to be buried following U.S.-Israeli airstrikes in June. Trump told Reuters yesterday (Friday) that the agreement being prepared calls for the United States to work with Iran to recover this material and transfer it to the United States. Iran denied agreeing to transfer uranium anywhere abroad.

A senior official in the Trump administration said the U.S. maintains "several red lines" in negotiations with Iran.

At the same time, Trump's call to Iranians at the beginning of the war to overthrow their government went unanswered.

Initially, U.S. allies from Europe to Asia were shocked by Trump's decision to engage in war without consulting them or considering the dangers they might face due to Iran's closure of the Strait.

Gregory Poling, an Asian affairs expert at the Center for Strategic and International Studies in Washington, remarked, "The alarm bell ringing for allies now is how the war has highlighted that the (American) administration can act in an erratic manner, without significant regard for the consequences."

After Russia's invasion of Ukraine in 2022, former Democratic President Joe Biden was cautious in imposing sanctions on Moscow's energy sector for fear of reducing oil supplies and exacerbating gas prices in the United States.

However, Trump, who pledged during his second-term campaign to provide low-cost gasoline and reduce inflation, has shown that he is affected by accusations that his policies are driving prices up. An example of this was the reduction of tariffs on China last year after it responded to high tariffs in kind.

Misjudgments

Just as Trump misjudged Beijing's response in the trade war, it seems he miscalculated Iran's economic response by attacking energy infrastructure in the region and closing the strategic waterway.

U.S. officials in closed discussions indicated that Trump mistakenly thought the war would be a limited operation like the surprise raid he conducted on Venezuela on January 3 and the strikes targeting Iranian nuclear sites in June. However, this time, the fallout has been much broader.

The message for Asian allies like Japan, South Korea, and Taiwan may be that Trump, who looks forward to friendlier relations with China, can be expected to pursue regional goals with less regard for their geopolitical and economic security.

Analysts believe those governments will adapt to anything that arises; like China's attempt to seize Taiwan, driven by concerns over Trump's credibility.

The same applies in the Middle East; where everyone desires a diplomatic solution but with security guarantees that ensure the region's stability in a sustainable manner.