PNN – Foreign Policy magazine wrote in an analysis that Donald Trump, despite his display of unconditional power in foreign policy, is vulnerable to one key factor: the reaction of financial markets; a factor that, according to the author, played a significant role in his retreat from escalating the war with the Iranian regime.
According to the report of Pakistan News Network; in this note, Michael Hirsch, a foreign policy columnist and author, argues that Trump’s sudden retreat from threatening to destroy Iran’s “civilization”—after the closure of the Strait of Hormuz and a surge in oil prices—shows that markets have become the most important practical constraint on his decisions. This trend, he writes, has been repeated many times in a pattern known in markets as “Trump Always Backs Down” (TACO).
According to this analysis, Trump, who sees himself as free from any external constraints, including international law or pressure from allies, is in practice reacting to falling markets and adjusting his policies. This pattern has been seen before with trade tariffs and the threat to seize Greenland.
Foreign Policy writes that the same pattern was repeated in the 40-day war with the Islamic Republic. Trump entered the conflict with the idea that it would be a quick and controlled war, but with the closure of the Strait of Hormuz – a scenario that US intelligence agencies had warned about for years – he was faced with a sharp increase in energy prices, a crisis in related markets and successive declines in financial markets. In contrast, any sign of easing tensions quickly led to a recovery in the markets.
Meanwhile, although Trump has spoken of achieving military goals, this analysis emphasizes that many of the stated goals, including the complete destruction of Iran’s nuclear and missile capabilities or the collapse of its governance structure, have not been achieved. The Iranian regime still controls the Strait of Hormuz and, according to this analysis, is now using this position as a new lever of pressure.
According to Foreign Policy, the most important consequence of this war for Iran is the consolidation of this leverage. Tehran’s practical ability to disrupt the Strait of Hormuz – through which about a fifth of the world’s oil passes – has gone from a theoretical threat to a proven reality and, according to some analysts, is a more effective tool of pressure than even its nuclear program.
The report also notes a shift in the US administration’s tone. While Trump previously spoke of the “total destruction of Iran,” he now speaks of the possibility of “reconstruction” and even economic cooperation with Tehran. According to the author, this shift in position reflects more than anything else market pressure and concern about the economic consequences of war.
Foreign Policy ultimately concludes that Trump’s identity as a businessman—who measures his success by indices like the Dow Jones and the S&P 500—has made market reactions one of the most important factors in his decision-making. For this reason, the analyst believes, “Trump’s main enemy is not Iran, China, or Russia, but global financial markets,” a force that operates outside his control and has repeatedly changed the course of his policies.