Blink and miss: Trump’s tactic of threats first and U-turn later is proving stale in Iran war
Blink and miss: Trump’s tactic of threats first and U-turn later is proving stale in Iran war
This week’s hot topic at the White House and Wall Street circles is the Persian Taco. It’s what’s served when Trump retreats from the brink of escalation in the Iran conflict. On Monday morning, as oil prices rose and stock futures dipped, the president abruptly reversed his plan to strike Iran’s civilian infrastructure, citing progress in talks. Bond yields and the price of Brent crude both saw swift rebounds, while the S&P 500 gained 1.5% by midday in New York, defying earlier predictions of a 1% daily drop.
Trump’s approach of issuing bold warnings before dialing back has become a familiar pattern. The recent incident mirrors his actions during the tariff crisis last year, where he initially threatened sweeping measures but later softened the stance. Markets, once rattled by the prospect of war, now react with tempered optimism to his reversals. Yet this strategy, once effective, now feels predictable, with investors growing skeptical of his commitments.
The OECD forecast that US inflation will surge to 4.2% this year.
Iran’s response has been decisive. After denying Trump’s claim of “productive conversations” toward resolving hostilities, the nation launched missile strikes into Israel, Iraq, and other U.S. allies. While the peace plan initially calmed markets, investors soon realized the president’s words held little weight. This trend of shifting course has persisted, with Trump’s latest reversal on March 9 failing to stem the S&P’s decline despite his assurances of “very complete” conflict resolution.
Today’s challenges are more complex than before. The November midterms loom, and Trump’s approval ratings are in freefall. Public support for the war has waned as gas prices climbed to nearly $4 per gallon. Meanwhile, Iran, though weakened militarily, remains steadfast in its control over the strategic Strait of Hormuz. Its capacity to disrupt global energy supplies—by blocking 12.5 million barrels of oil and 11.5 billion cubic feet of gas daily—gives it leverage in the ongoing standoff.
Trump’s dual goals of ending the war and securing oil flow through the strait are now at odds. His ability to dictate the outcome hinges on the U.S. committing ground forces, a move that would intensify political tensions domestically. Iran, in contrast, has the time to regroup and prove its resolve, ensuring the conflict’s trajectory remains out of Washington’s hands.
