Trump Shoots Himself in the Foot

It was an eventful weekend with regard to the United States-Israel war against Iran. Most of the events were driven by cult leader, convicted felon, and failed President Donald Trump. While Trump may view himself as a master deal-maker, it is unlikely that very many others, least among them the Iranians, see him that way. To the contrary, Trump has a primitive approach to negotiations, preferring bluster and bullying to understanding and compromise. Consider that free passage through the Strait of Hormuz was simply taken for granted before the war. So much so that Trump did not expect that Iran would close the strait. Now, in the aftermath of Trump's war, reopening the strait has become a major demand for ending the fighting. Trump's own actions created a problem that he now has to negotiate to resolve. Trump is now about to repeat the mistake of playing into Iran's hands by threatening his own blockade of the Strait of Hormuz. The strongest weapon that the Iranians have is economic pressure on global economies, including that of the United States. Trump is about to increase that pressure.

You don't have to be an expert in international relations to understand how Trump has been shooting himself in the foot. That's good because I am not such an expert. However, some of those who are frequently considered knowledgeable are making absolute fools of themselves by refusing to address the elephant in the room. Take Washington Post columnist writer David Ignatius, who this weekend imagined Trump squeezing Iran "like a UFC fighter with a chokehold on his opponent, waiting for him to ‘tap out.’" That analogy might make sense if the UFC fighter and the entire audience were also being choked. But Ignatius ignores the pain being put upon world economies or how Trump's actions have provoked that pain.

This weekend started off with negotiations between the United States and Iran. Iran was represented by a group of diplomats, skilled politicians, and technical experts. The U.S. delegation was led by Vice President and reply guy JD Vance, and consisted of real estate investor Steve Witkoff and Trump's son-in-law Jared Kushner. The talks apparently lasted for more than 20 hours, but in the end, Vance announced that the two sides had not reached an agreement. Notably, Vance said that this was because the Iranians "have chosen not to accept our terms." This epitomizes the Trump administration's approach to negotiations. There is no give and take and no search for common ground. Rather, the other side is simply expected to accept Trump's terms and, if it refuses, he increases his bullying.

The problem for Trump is that he believes that he holds all the cards when, in fact, he doesn't. Iran's control of the Strait of Hormuz is a pretty significant card that it holds. As a result, Trump's normal approach is ineffective.

After the talks had concluded, Trump "truthed" on Truth Social that the only issue that really mattered was "NUCLEAR." The issue is whether or not Iran will be allowed to enrich uranium at all. The Joint Comprehensive Plan of Action, which former President Barack Obama worked out with Iran, allowed Iran to maintain a stockpile of low-enriched uranium. Trump, of course, tore up that plan during his first term. As such, Iran has been free to enrich to higher levels. Prior to the war, Iranian negotiators meeting with Witkoff and Kushner agreed to dilute its highly enriched uranium but insisted on the right to maintain low-enriched uranium for civilian purposes. This was not acceptable to Trump, leading to the collapse of the pre-war talks and the war itself. Trump continues to take this maximalist position, telling Maria Bartiromo that "I want everything. I don't want 90%, I don't want 95%. I told them, 'I want everything.' They have no cards."

To repeat, Trump is wrong about Iran having no cards. Control of the Strait of Hormuz is a powerful card. Traffic through the strait is down over 90% of prewar levels. This has led to severe petroleum shortages and higher prices for oil that are severely affecting economies worldwide. In the U.S., gasoline is now over $4 a gallon. Trump has been promising that gas would be below $2. Goldman Sachs just issued a report saying that higher oil prices are expected to completely offset the economic growth that should have resulted from the One Big Beautiful Bill Act. Trump has already eliminated the promised economic benefit of his premier legislative achievement.

Trump's reaction to the failed talks was to make things worse. He announced that the U.S. Navy would blockade the Strait of Hormuz and prevent all traffic from entering or leaving. He also said that the navy would attempt to interdict any ship on the high seas that had paid a toll to Iran. A subsequent announcement by the U.S. Central Command narrowed the threat to stopping only traffic to or from Iranian ports and mentioned nothing about ships that had paid tolls. Iran has been exporting its own oil through the strait and, due to higher oil prices, earning considerable sums of money. The goal is to cut off this funding source and pressure Iran into making concessions.

The flaw in Trump's plan is that the Iranian oil has been helping to stabilize oil prices. In fact, recently the Trump administration lifted sanctions on Iranian oil in order to increase supply and lower prices. Stopping the Iranian oil will boost petroleum prices even further than they already are. Iran's Speaker of the Islamic Consultative Assembly, Mohammad Bagher Ghalibaf, illustrated this in a tweet with a mathematical equation: ΔO_BSOH>0 ⇒ f(f(O))>f(O). As explained by Javed Hassan in another tweet (I am no mathematician), this means that the price delta caused by the Blockade Strait of Hormuz (BSOH) is greater than zero and implies that there will be both a first order effect, f(O), and a significant second order effect, f(f(O)). Ghalibaf taunted that we will soon be "nostalgic for $4–$5 gas." Both West Texas Crude and Brent Crude are up over 5% as I write this.

Trump has essentially created an economic game of chicken. The U.S. economy, global economies, and Iran's economy are all going to be squeezed. The question is who will blink first. Complicating things for Trump is that the U.S. has its midterm elections coming up. Republican candidates are not going to like facing voters when oil prices are out of control. The Iranian government faces no such pressure. Some of the damage being done to oil production facilities will be harder to undo the longer the conflict lasts. Trump is risking a worldwide recession that could last for months or even years. Every day that his blockade lasts, he will face increased demand to lift it.

Moreover, most of the Iranian oil has been going to China. By interfering with that oil, Trump is risking conflict with China. Will the U.S. Navy stop Chinese-flagged oil tankers? China is not known to take such slights lightly. Trump thought that Iran would be a repeat of Venezuela and now he is facing a potential conflict with China. Talk about miscalculations.

With oil prices rising overnight and stock market futures suggesting that the market would tank today, the Trump administration resorted to its repeated tactic of claiming progress toward ending the war. Axios published a story before markets opened in the U.S. this morning saying that a deal between the U.S. and Iran is still possible. That may calm markets a bit.

There were reports this morning that Iran is studying whether it can abandon enrichment, which would be a concession to Trump. However, because domestic uses of enriched uranium are important to the Iranians, they would likely expect to keep some of their current stockpile, something that Trump has said would not be allowed. An agreement is certainly possible, but it will require Trump to move off his maximalist position.

The bottom line is that the debate now is over two issues that Trump himself created. Obama's nuclear agreement with Iran had put an end to nuclear weapons programs and limited the enrichment of uranium. Trump cancelled that agreement, leading to the current impasse about Iran's nuclear programs. Trump's war resulted in Iran closing the Strait of Hormuz and creating economic problems for the U.S. and the rest of the world. Now Trump is creating additional economic difficulties and risking conflict with China. As has been the case from the first day of the war, he is flailing and unable to recognize that he is digging an ever-deepening hole.