Trump finds himself in difficult position as war on Iran becomes economic fight: Analysis

Added: 2026-05-28

[00:00:00]Now, let's speak to Doug Bandow. He's a senior fellow at the Cato Institute and he specializes in US foreign policy.

[00:00:06]He's live from Washington, D.C. Doug, good to see you. Um Iran's president, Peseschkian, says the economic war has become the new bad this new main battleground, actually. He's accusing Washington of trying to hurt Iranians' livelihood. Do you think that Trump has actually turned the fight into an economic war?

[00:00:29]Well, in many ways it's an economic war because the you know, military war has ended. That is other than an occasional strike. The US you know, hit some sites uh you know, recently that the main fight between them was dual blockades.

[00:00:47]That and that the impact of that is economic, where the Iranian blockade effectively of the Strait of Hormuz impacts the world economy. The Trump blockade of Iranian oil shipments it reduces the ability of Iran to make money selling oil. So, today that is the main you know, venue of fighting between them.

[00:01:09]But if this has indeed turned into an economic war and in spite of this US blockade, you've got the sanctions, you've got the frozen Iranian funds and now as Trump says, the Iranian economy is in freefall. Yet Iran is still refusing to give up its control of the Strait of Hormuz. So, what else is it going to take now for Trump to win this economic war?

[00:01:33]Well, that of course is Trump's problem.

[00:01:35]Is it's not at all clear. The only thing he can threaten to do is to as he put it, finish the job. Presumably meaning restart the military conflict. But that is something which most of the Gulf states, at least other than the UAE, do not want because they recognize the attack on them would probably be even more fierce than it was before.

[00:01:58]And to have uh you know Iran go after energy facilities, economic facilities, maybe desalinization plants in the Gulf countries would be extraordinarily destructive.

[00:02:11]So, Trump is in a very difficult position.

[00:02:15]He has inadvertently given Iran a very powerful weapon by closing the Strait of Hormuz. He's not willing to risk US ships to try to open it.

[00:02:24]It's going to be hard for him not to make a deal that's to the satisfaction of Iran.

[00:02:31]Doug, Donald Trump also said today that Iran thought they could outwait him and that he doesn't care about the upcoming midterms. He also earlier said that he doesn't think about Americans' financial situation when negotiating this Iran deal. But do you think that he should care about those things, these aspects of the economic war?

[00:02:52]Well, he might be saying that, but no one really believes him.

[00:02:56]The last thing he wants is to have a Republican debacle in November. His allies who have been legislating for him on Capitol Hill are clearly going to him saying, "End this."

[00:03:10]And the rest of the world, he is hearing from the Europeans, the Gulf countries, even friendly countries, Asian countries like South Korea and Japan, everyone wants this to end. So, I have no doubt that he is hearing this, and in fact he does care. He's just trying to present this to enhance his negotiating position.

[00:03:32]Can I also ask for your help in analyzing another statement we heard from the White House today? They're calling this report from Iranian state TV a complete fabrication. This report, of course, for example, mentioned that US troops would pull out from the vicinity of Iran, that possibly release of sanctions, and so forth. But, do you think that these reports are indeed a complete fabrication or is Trump possibly on the verge of giving Iran some of the things that they want?

[00:04:04]Well, it may be true that an agreement is a fabrication, but I am certain that these issues are being discussed.

[00:04:11]And in fact, from Trump's standpoint, he may want to get US troops out. The Gulf countries may want him to get those troops out. So, he might be throwing this out there as a possibility, but neither side is likely to, you know, give the full scale of the potential uh concessions they're willing to make.

[00:04:31]They are still negotiating. Until they get an agreement, both sides, quite honestly, are likely to lie to the rest of us as to the status of the agreement.

[00:04:41]All right. Doug Bandow, thank you so much for joining us. That's Doug Bandow, uh a senior fellow at the Cato Institute in Washington, D.C.