The new sanctions announced by the US against Iran, along with threats against third countries seeking to conduct transactions with Tehran, confirm that President Donald Trump is building his foreign policy upon a basic, raw principle: power does not need to persuade, it only needs to be imposed.
Having failed both in military operations and in negotiations, Washington is putting into effect its ultimate plan: the economic strangulation of Iran...
Yet it is not only Iran, the «mortal enemy».
It is also the closest ally, Canada, with which the US is engaged in an unprecedented trade war...
It is evident that Donald Trump is putting the US economy into a global war.
However, as Washington simultaneously opens fronts with one of its fiercest adversaries and with one of its closest allies, this philosophy of enforcing power is tested to its limits.
From the war of attrition with Iran to the unprecedented economic clash with Canada, the question is no longer merely how much power the United States possesses, but how far Donald Trump can go before the projection of force begins to produce the exact opposite outcome: namely resistance, retaliation, and the weakening of American influence itself.
Already, the US and Donald Trump are experiencing their first crushing defeats in the Persian Gulf...
Trump’s premise
The presidency of Donald Trump is based on the premise that he and the United States are so powerful that both allies and adversaries must submit to his will.
His break with decades-old doctrines of American foreign policy runs through his administration’s speeches and national security strategies.
This approach was articulated perhaps most clearly last January by his close aide, Stephen Miller, who told CNN that certain «iron laws» govern a real world that is «ruled by power, ruled by force, ruled by might».
The test
However, this philosophy faces its most severe tests in the increasingly intense confrontations with Iran and Canada.
Iran has defied the might of the American military for six months, in a war that Donald Trump started but has failed to conclude.
The Prime Minister of Canada, Mark Carney, who broke off trade talks with Washington, has meanwhile argued, more emphatically than any other Western leader, that the US under Donald Trump «has changed».
On Saturday, Mark Carney told his country that Donald Trump is «weaponizing economic integration».
It is indicative of the extreme turmoil of the Trump era that Canada, one of the most faithful friends of the United States, finds itself in a state of economic warfare with the US similar to that of Iran, one of Washington’s worst adversaries.
Nevertheless, the Trump administration left no doubt on Monday about what it seeks, as it wages a trade war with Ottawa and an actual war with Tehran.
Economic offensive
Treasury Secretary Scott Bessent announced an «economic offensive» against the global financial connections of Iran, drawing a parallel with the D-Day landings that altered the course of World War II.
Donald Trump, meanwhile, warned on social media that «the US will always be much bigger, richer, and stronger than Canada».
And he added: «Someone has to make these clowns get into line».
Will Trump stay the course?
The rhetoric of the US administration, as articulated yesterday, Monday, August 24, shows that Donald Trump is now sending the American economy to war.
Donald Trump hopes to secure an overwhelmingly favorable trade agreement with Canada and, ultimately, cause the fall of the regime in Iran.
However, the path forward is uncertain on both fronts, because the President often retreats when the economic consequences of his attempts to enforce his authority become apparent.
Any prolonged American effort to prevail against Canada and Iran, as well as against third countries facing sanctions as part of his drive to shut down Tehran’s financial networks, could provoke retaliation that would increase energy and food prices for American consumers.
It could also rattle American markets at a time when some investors fear a crisis in the bond market.
If Monday’s threats are a prelude to more TACO («Trump Always Chickens Out»), the President will undermine both his own power and that of the country, moving closer to the status of a politically weakened, outgoing president as difficult midterm elections loom in November.
Real power
Scott Bessent’s announcement was the latest American attempt to find a new exit from the war with Iran.
However, the parallel with D-Day appeared ill-matched in tone, given the horrific sacrifices made by American soldiers to liberate Europe.
And unlike Scott Bessent, the Supreme Allied Commander, General Dwight Eisenhower, did not spend days in 1944 heralding a massive attack only to conclude with fresh sanctions threats without a timetable.
Nevertheless, administration critics often overlook the real power that Donald Trump could wield through the clever application of economic warfare.
Extreme damage
A genuinely global effort to cut off Iran’s avenues to finance and trade could inflict extreme damage on an economy that is already devastated.
«It can work if we manage to secure the backing of our partners», former senior Treasury official Max Meizlish told CNN, specifically referring to Bank Melli, an Iranian state-controlled commercial bank operating in France, Germany, and elsewhere, which serves as a critical cog in Iran’s sanctions-evasion efforts.
Kenneth Rogoff, former chief economist at the IMF and currently a professor at Harvard University, stated that «at a fundamental level, sanctions work if you manage to have most of the world with you. But if you don’t, it is very difficult».
The White House overestimates
Donald Trump might have had greater success with such an approach before alienating US allies with a war that many consider reckless and illegal.
And the White House may be overestimating its capacity to influence developments inside Tehran.
Signs of disagreement between pragmatists and hardliners regarding the economy are encouraging.
However, Washington for decades has overinterpreted such signs and assumed that regime collapse would follow.
Most damagingly, the Trump administration is sending signals suggesting it might not take even its own policy seriously.
There was no immediate action taken against a series of Chinese banks facilitating Beijing’s trade in discounted Iranian oil.
China’s reaction
China has already stated that it will defend its interests, phrasing that points to potential retaliation against the US, which could further drive up prices and infuriate American voters.
Last year, by threatening to restrict exports of rare earth minerals critical to the American defense and technology industry, it demonstrated that it can counterbalance Donald Trump’s power.
And the American leader also has an important date circled on his calendar: the state visit of the President of China, Xi Jinping, next month.
It is hard to imagine him souring the climate before then.
In a revealing moment, Scott Bessent merely reinforced doubts regarding the administration’s resolve to adhere to its policy.
He was asked why he did not immediately impose secondary sanctions on entities transacting with Iran.
«Well, we are giving everyone a chance to correct their bad behavior; why would I want to blow up the global financial system?» the US Treasury Secretary replied.
Canada sees a confrontation going beyond a trade dispute
The US administration is less hesitant about sanctioning Canadian hockey stick manufacturers than Chinese banks, CNN notes in an analysis.
And the rhetoric on both sides of the border is growing increasingly toxic.
«We must remember that Canada is a state. Sorry, Freudian slip. That was truly an accident», Vice President JD Vance stated on Monday.
The Premier of Ontario, Doug Ford, stated in a press conference: «I have plenty of room on my ass, so Donald Trump has plenty of room to kiss it».
Venting tension with statements of this nature can sometimes create political space for restarting talks.
However, Canadians believe they are embroiled in something more than a trade dispute.
Drew Dilkens, Mayor of Windsor in Ontario, directly across from Detroit, explained the damage caused by Donald Trump’s claims that Canada should become the 51st state of the US.
«When you say it the first time, maybe you can take it as a joke, but it was the fact that he doubled down and of course kept repeating it», he told CNN.
They will not dictate our future
Ottawa stated that, among other differences, Mark Carney ended trade talks after the US attempted to weaken the country’s constitutional guarantees for bilingualism.
Printing packaging for products sold in Canada in both French and English constitutes an annoyance for American businesses.
However, it simultaneously represents an affirmation of the cultural and linguistic diversity that holds Canada together.
Mark Carney also hinted that Washington sought to restrict the trade agreements his government could conclude with third countries.
«We will not allow any nation to dictate our future», Mark Carney stated on Saturday.
They will pay the price
As the smaller economy, Canada will suffer the greatest damage in a trade war with the US.
It can, however, challenge American power.
A prolonged tariff confrontation could lead to mutually assured destruction of the automotive industry on both sides of the border.
And the growing impact of Canadian boycotts could weaken Republicans in critical electoral races in the border states of Michigan and Maine, which could decide who controls the US Senate next year.
And in seeking to enforce his dominance, Donald Trump may have uncovered another «iron law» of power that Stephen Miller failed to mention in January.
When people see their sovereignty and independence threatened by a hostile, stronger power, there is almost no price they are not willing to pay.
Trita Parsi (analyst, Quincy Institute): Sanctions against China unlikely to materialize
US threats to impose sanctions on Chinese entities over their trade transactions with Iran are unlikely to materialize, due to a combination of diplomatic and legal obstacles, according to Trita Parsi, Executive Vice President of the Washington-based Quincy Institute.
«If the US moves against the Chinese now, just a few weeks before Chinese President Xi Jinping is supposed to arrive in Washington, I consider it unlikely», Trita Parsi told Al Jazeera, pointing out that Washington faces significant difficulties on both fronts.
On a diplomatic level, Trita Parsi pointed out that Beijing helped avert a severe economic crisis at the height of the war by pausing oil purchases at the moment prices were spiking.
This led to a sharp drop in demand and kept the price of crude below 100 dollars per barrel for extended periods.
«They did this because China’s goal was to ensure that this crisis would not trigger a global recession, which would be bad for China», Trita Parsi stated, arguing that this move indirectly protected Washington as well from an energy shock that would have hit the American economy.
Beyond that, it is unlikely that Beijing will accept American attacks on Chinese companies or economic interests without reacting.
«I suspect we will see major pushback from the Chinese if the US ultimately moves against Chinese companies», Trita Parsi stated.
Domestically, Trita Parsi also noted that Beijing has enacted laws punishing Chinese companies if they comply with foreign sanctions, adding an extra layer of legal complexity that further impedes Washington’s effort to enforce sanctions.
Iran’s dilemma
There is little doubt that this latest course of US actions will not be welcomed in Tehran, confronting the country with a major dilemma.
On one hand, shifting hopes for diplomatic engagement and rapprochement with Washington still exist.
On the other hand, Tehran faces an increasing military display of force, along with warnings of yet another potential round of confrontation, a war of attrition, or a conflict that could expand beyond regional borders.
Speaking specifically about reactions from the Iranian side, the Speaker of the Iranian Parliament, Mohammad Bagher Ghalibaf, recently wrote on social media: «The Americans know that no one takes their grand rhetoric seriously. The United States is not in an economic position to further restrict its relations with other countries».
He added that «Iran’s trade partners have made clear to us, both through the media and by sending messages, that they do not take the statements of US Treasury Secretary Scott Bessent seriously at all», Mohammad Bagher Ghalibaf argued.
www.bankingnews.gr
Σχόλια αναγνωστών