The Iran war has revealed Trump's pressure point: the economy

Trump was quick to declare the strait safe as he touted a deal-in-the-making with Iran that he said would be completed soon and mostly on his terms. But Iranian sources told Reuters gaps remained to be resolved.

Experts have warned that even if the ​war ends soon, the economic damage could take months if not years to fix.

A key question is whether any deal achieves the objectives Trump has laid out, including closing Iran’s path to a nuclear weapon, which Tehran has long denied it is seeking.

Iran has a stockpile of highly enriched uranium believed buried by U.S.-Israeli ‌strikes in June. Trump ⁠told Reuters on Friday the emerging deal calls for the U.S. to work with Iran to recover the material and bring it to the U.S. Iran denied agreeing to a transfer anywhere outside its territory.

A senior Trump administration official said the U.S. was maintaining "several redlines" in negotiations with Iran.

At the same time, Trump’s call at the war’s outset for Iranians to overthrow their government has gone unheeded.

Allies from Europe to Asia were initially stunned by Trump’s decision to go to war without consulting them or seeming to take into account the risk to them of Iran closing the strait.

“The alarm bell ringing for allies right now is how the war has highlighted that the administration can act erratically, without much regard for consequences,” said Gregory Poling, an Asia expert at the Center for Strategic and International Studies in Washington.

After Russia’s 2022 invasion of Ukraine, former Democratic President Joe Biden was cautious about ​imposing sanctions on Moscow’s energy sector out of concern for reducing oil ​supplies and inflating U.S. gas prices.

But Trump, who ran for a ⁠second term on promises of cheap gas and low inflation, has shown himself sensitive to accusations that his policies raise prices. An example was when he reduced tariffs on China last year after it retaliated.

MISCALCULATIONS

Just as Trump misjudged Beijing’s response in a trade war, he seems to have miscalculated how Iran might strike back economically in a shooting war - by attacking energy infrastructure in Gulf states and blocking the strategic waterway between them.

Trump mistakenly ​believed the war would be a limited operation like the January 3 lightning raid in Venezuela and June’s strikes on Iran’s nuclear sites, U.S. officials have said privately.

But this time the repercussions are more far-reaching.

The ​message to Asian allies such as Japan, ⁠South Korea and Taiwan may be that Trump, who is looking for warmer ties with China, can be expected to pursue his regional goals with less regard for their geopolitical and economic security.

Analysts believe those governments will adjust for any contingency, such as a Chinese bid to seize Taiwan, out of concern over Trump’s reliability.

European countries, annoyed they are bearing so much of the economic brunt of a war that they never asked for, are likely to be even more nervous about Trump’s commitment to continued aid to Ukraine in its war with Russia, analysts say.

Gulf Arab states want the war to end soon, but will be ⁠unhappy if Trump ​cuts a deal without security guarantees for them.

"An end to this conflict should not also create a continuous instability in the region,” said Anwar Gargash, diplomatic adviser to the president ​of the United Arab Emirates.

Most MAGA supporters have stuck with Trump despite some prominent dissenting voices. But there are growing doubts whether he can help his party recover lost ground, especially with independent voters, in time for the midterms.

“He’s aware that a significant portion of the country outside his MAGA base, and even some within the MAGA base, are vehemently opposed ​to what he’s done,” said Chuck Coughlin, an Arizona-based political strategist. “And I think the price is going to come due.”

Reporting by Matt Spetalnick and David Brunnstrom; additional reporting by Nathan Layne, Maha El Dahan, Patricia Zengerle and Dan Burns; writing by Matt Spetalnick; editing by Don Durfee and Rod Nickel