By Tom Fowdy
Over the last weekend, US President Donald Trump proclaimed an ultimatum to Iran that if they did not "reopen the strait of Hormuz within 48 hours," the US would retaliate in destroying its energy infrastructure. Tehran predictably replied by stating that if America or Israel done so, it would target critical energy infrastructure in the Gulf States, causing further havoc in global oil and gas markets. Predictably, markets soured in receiving this news and stocks nosedived.
Monday came, and the 48 hours were almost up, when all of a sudden, President Trump wrote on Truth Social that the energy strikes had now been "called off" and that the US and Iran had made progress on dialogue towards a deal to "completely end hostilities". Tehran denied any talks had taken place, even indirectly, and labelled it "fake news", but despite this markets suddenly rocketed upwards, with sleuths identifying a series of pre-set transactions that smelled of insider trading.
Anyone who knows even a thing about Donald Trump will know that he is unusually, if not obsessively, sensitive to markets, and deliberately uses publicity as part of a concerted strategy to manipulate them in his favour, knowing that investors follow sentiment and feeling, not facts. Beginning in his first term, he began to use the Dow Jones stock market as a barometer of his own success and learnt that the political gravity of his announcements can send it up or down. With this pattern established, the President created a strategy that when he engaged in deliberately destructive policy decisions, such as tariffs or war, he could simply say the right things, even if it was total hyperbole, and the markets would follow, even if the status quo had irreversibly changed.
Hence, during his first trade war with China in 2018, stock markets crashed. However, Trump was able to recuperate the markets very quickly by repeatedly tweeting optimism towards an eventual deal. Again, following his global trade assault of 2025, markets suffered, but Trump seemed to psychologically control them by proclaiming a series of trade deals and more significantly, claiming that various countries that agreed to invest hundreds of billions in the US. Whether they do or not in the end, is not relevant, it is the fundamental psychological flow which his announcements create which matters. This pattern of seemingly announcing dramatic measures and then retreating with optimism has given him the nickname TACO, an acronym for "Trump always Chickens Out."
Again, he appears to be playing the same formula with Iran, but there are significant reasons to be sceptical. This time, Trump jumped head first into a major regional conflict with Tehran without any thought of the consequences, based on a miscalculation that the US and Israel could quickly topple the Mullah regime. This failed, and the consequences have been disastrous for global energy markets. Trump's ultimatum to Iran that they re-opened the strait was not a sign of strength at all, but rather desperation by a man out of ideas against a country that has maximised its own strategic leverage in ways they had not been able to plan for. If the President banked on a quick submission by Tehran, by all accounts as said already, he's already lost.
Because of this, the President's sudden talk of a peace agreement to end the war is an obvious face-saving exercise designed to buy time by attempting to reassure markets. While there is a possibility Trump is looking for a way out, which of course he will claim as a "victory" regardless, none of these gestures solve the question as to why a country that holds serious leverage would willingly capitulate to one-sided American terms, when the US and Israel has shown a willingness to carpet bomb it and wipe out its leadership? Especially, not considering when it was their public goal to terminate that regime? Do you think for one moment Iran is going to just say "Okay, America, we're all good now, let's just stop and Israel can just unilaterally bomb us whenever they please, and never mind that any deals we've made with you in the past just get ripped up anyway"?
Tehran may have suffered significantly from the bombing campaign, but like it or not, it is not in a position of existential weakness when it has closed the world's most critical energy shipping route and shown the capability to destroy oil and gas infrastructure, potentially nosediving the world economy. Trump, for all his bluster, clearly doesn't have an answer to this, and the fact he appears to be moving to the table, even as a show of market trickery, would indicate he is on the ropes. Recognising this, if you are Iran, why would you stop? Their terms are likely going to demand strategic concessions, and anyone who follows US foreign policy knows America don't do "strategic concessions" so as always, as it has been with China, Russia, and even North Korea back in 2018, Trump might have the optics to show for markets, but he doesn't have the solutions, and it's no less true with Iran.
The views do not necessarily reflect those of DotDotNews.
Read more articles by Tom Fowdy:
Opinion | US proposal to lift sanctions on Iranian Oil shows it has already lost
Opinion | How Trump's Iran disaster 'burst the bubble of American omnipotence'
Opinion | South Korea finally learns the US is not the 'ironclad' ally it claims to be
Opinion | Why the US can never escape the Middle East Quagmire
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