Commentary: Trump is suddenly waging two wars—one with trade partners and one with Iran

Life can get complicated awfully fast.
President Trump hoped his first year in office would bring victories on tax cuts, trade realignment, and deregulation. Five months in, however, he has not just one war on his hands, but two.
First is the trade war with dozens of nations, which many economists say is bound to end up an unwinnable quagmire. And now, Trump has stepped into a risky Middle East war by green-lighting US attacks on three Iranian nuclear weapons sites, a step other presidents have considered and averted.
The June 21 American attack on Iran may turn out to have been a risk worth taking. It came after a week of attacks on Iranian nuclear and military targets by Israel, which says Iran was days or weeks from having the capability to build a nuclear weapon. Iran's Islamic theocracy has long threatened Israel's destruction, and a nuke would give them the means to do it.
Starting June 13, Israel mounted a brilliant campaign that neutered Iran's air-defense network, killed several military leaders, and damaged Iran's nuclear complex. But it needed American help to finish the job. Only American 'bunker buster' bombs had the heft to penetrate deeply buried facilities at the heart of Iran's nuclear program.
Trump okayed the raid, and American warplanes dropped at least a dozen of the giant bombs on June 21. Trump says Iran's nuclear program is gone. Maybe. It could take days or weeks to determine if the bombs destroyed everything on the target list. The Pentagon may never know for sure. Iran could have moved some nuclear material or other parts of the program to reconstitute later.
Trump obviously hopes the June 21 strikes are a one-and-done operation. That would allow him to refocus on a trade war that has key deadlines approaching and a huge tax bill that's bogging down in Congress.
But Iran may not cooperate. 'Wars are easy to start, but difficult to end,' Byron Callan of Capital Alpha Partners wrote in a June 22 analysis. 'We are highly skeptical that Iran 'surrenders.''
Iran is in a weak position, yet it may influence the outcome of Trump's economic agenda, not to mention other Trump priorities such as immigration enforcement and anything else that depends on Trump holding a reasonable level of popular support at home. Wars can boost a president's popularity and political capital if they go well (and quickly), but they can also drag down a presidency if they bog down or go off the rails. President Lyndon Johnson, most famously, dropped his 1968 reelection bid as opposition to the Vietnam War exploded.The biggest market concern, for now, is whether Iran will try to close the Strait of Hormuz, the waterway at the eastern end of the Persian Gulf that's a transit point for 20% of the world's oil. Iran could mine the strait, attack oil tankers, or conduct sabotage that could easily send oil prices, which were around $75 per barrel before the US attacks, over $100 and possibly higher.
But closing the strait could be self-defeating for Iran. First, it would block its own oil from flowing into markets, depriving the government of badly needed cash. It would also trigger a prompt US response and possibly end with the destruction of much of Iran's navy, making Iran even weaker.
'The next move is up to the Iranians,' economist Ed Yardeni of Yardeni Research wrote in a June 22 analysis. "Our bet is that they will sue for peace. While the Mullahs and their generals may be fanatics, they aren't crazy. If that's the case, then the price of oil should fall and stock markets around the world should resume their ascents.'
Iran has other moves, however. Instead of targeting the Strait of Hormuz, it could attack US ships and bases in the region with drones and missiles. There are several ways to go about that. One might be a symbolic fireworks show that lets Iran say it retaliated, without doing much harm. That may let both sides say they've done what they needed to do and are wrapping things up. But Iran has killed Americans before and it could do so again, which might leave Trump feeling he has no choice but to escalate further. In an escalation scenario, Iran would still have the option to go after the strait, which would keep oil prices elevated.
Iran could also sit back for a while and plot something more cunning. Affiliated terrorist groups could plot overt or covert attacks on American assets in the Middle East or elsewhere. Iran backed the 1981 bombing of the Marine barracks in Lebanon, the 1996 bombing of an Air Force housing complex in Saudi Arabia, and numerous attacks against US troops in Iraq from 2003 to 2011, among other crimes. They'd relish a few more notches on the bloody belt.
As the first US president to approve a direct attack on Iran, Trump risks an open-ended entanglement involving dead Americans, damaged American prestige, and a disapproving electorate. There are already signs that Iran salvaged some of the enriched uranium needed for nuclear bombs. If so, that would raise the question of whether the United States should attack again and whether it could even destroy all of Iran's uranium if it wanted to.
It may be more likely following the US attacks that Iran decides to fully end all cooperation with international inspectors and nonproliferation regimes and sprint toward a nuclear weapon, even a crude one. 'It is possible an Iranian regime could pick up the pieces and get to a bomb in a couple of years,' Ilan Goldenberg, a former Defense Dept. Middle East analyst, wrote in Foreign Affairs. 'The best and most durable option for the United States all along was to pursue a diplomatic deal that verifiably restrained Iran's nuclear program. That option is much less likely.'
Trump has entered the Middle East caldron just as his trade war is approaching a climactic moment. Trump set a July 9 deadline for dozens of countries to negotiate trade deals favorable to the United States or face punitive 'reciprocal' tariffs. But the whole world has seen that Trump backs down on tariff threats when markets slide, and the Iran standoff will make markets much twitchier than they'd otherwise be.
That could force Trump to postpone the July 9 deadline. Markets would cheer, since tariffs damage corporate profitability, and any delay is a reprieve. But another delay would also prolong the uncertainty that's suppressing the US stock market and possibly weakening the economy.
Trump also can't afford a sudden spike in oil and energy prices, which would create significant inflationary pressure if it lasted. Economists already think Trump's tariffs could add a percentage point to inflation, or more, and that's with relatively low energy prices. An energy spike would make tariff inflation more painful.
It's not all downside for Trump. Iran's theocratic government might lose its nerve and decide its quest for the bomb isn't worth the trouble. If Trump did manage to rid the world of an Iranian nuclear menace, without much cost, it could stabilize the Middle East, a little, and solve one very dangerous problem. Any kudos for that, however, will only come after weeks, months, or even years of tension.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
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