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
As the global financial markets recalibrated, a recurring pattern emerged with the latest twist. On Monday, President Trump’s aggressive posture toward Iran shifted abruptly, with the U-turn occurring just hours after he had threatened to target the country’s civilian energy infrastructure. The abrupt reversal came amid rising oil prices and falling stock futures, which had signaled a potential crisis. The White House, under pressure, quickly announced a pause on the attack, citing positive talks with Iran as the reason for the strategic retreat.
A familiar maneuver
This latest episode echoes a well-worn strategy. Trump’s approach of issuing bold threats and then retracting them has been a staple of his political playbook, from the tariffs crisis to the current standoff. The initial shock of his proclamation sent bond yields soaring and the S&P 500 plunging, but the quick backtracking allowed markets to stabilize. By Tuesday, oil prices had dipped below $100 a barrel, and the stock index had rebounded 1.5% by midday in New York.
However, the efficacy of this tactic seems to be waning. Investors, once placated by Trump’s dramatic reversals, are now questioning his authority. When he claimed that “productive conversations” had led to a “complete and total resolution of our hostilities,” the message was met with skepticism. Iranian officials swiftly dismissed the claim, launching missile strikes into Israel, Iraq, and other U.S. allies in the Gulf. This response has left markets on edge once more.
A history of unpredictable shifts
Earlier this year, Trump demonstrated his penchant for sudden course corrections. On 9 March, he attempted to curb oil price spikes by asserting the war would end “soon, very soon” as it was “very complete, pretty much.” The S&P 500 recovered that day, but the decline resumed rapidly. This pattern suggests that while Trump can momentarily manipulate market sentiment, his influence over the broader geopolitical narrative is diminishing.
His past moves, such as the “reciprocal” tariffs imposed globally, initially caused market turmoil. Yet, as the administration adopted a more gradual approach, the financial sector adapted. Even as the dollar weakened, the stock market remained resilient. But now, with the November midterms looming and public approval of the war declining, Trump’s ability to control events appears more precarious.
The clash of objectives
Trump’s dual goals—ending the war and securing oil flow through the Strait of Hormuz—are in direct conflict. While he seeks to withdraw forces and halt hostilities, Iran has positioned itself to leverage the situation. The country’s leadership, though weakened, still holds the strategic advantage. It can impose significant economic costs by restricting oil and gas supplies, potentially disrupting global energy markets by up to 12.5 million barrels daily.
With the average gas price nearing $4 a gallon and inflation projected to rise to 4.2% by the OECD, the stakes have never been higher. Yet, Tehran’s incentive to compromise remains low. It calculates that demonstrating its capacity for retaliation is the only way to deter future strikes. For the U.S., this means a choice between prolonged diplomatic engagement or escalating military involvement, both of which carry political risks.
As markets continue to test Trump’s resolve, the question lingers: can his go-between tactics still sway the outcome, or has the era of quick fixes come to an end?
