This week in Trumponomics: Waiting for the bomb

Yahoo

21-06-2025

President Trump has a binary decision to make: Whether to join Israel's attacks on Iran or abstain. But the consequences, either way, will likely be unpredictable, messy, and possibly momentous.
Markets have been blasé about the widening Middle East war that erupted on June 13 when Israel attacked Iranian nuclear weapon facilities and other targets. Stocks have barely flinched. Oil prices have drifted up, but at $75 per barrel, they're nowhere near crisis levels.
The calm may be deceptive.
'The potential for major downside market surprise is more elevated than many would have it,' Terry Haines, founder of Pangaea Policy, wrote in a June 19 analysis. "Market volatility almost certainly will be larger and longer in duration than the usual geopolitical event that is contained quickly.'
Trump started out talking tough about Iran's predicament, posting on social media on June 17 that he expected 'unconditional surrender' from the ruling mullahs. But Trump is clearly riven. His whole 'America first' governing theme is based on avoiding foreign entanglements, not embracing them. He calls himself a 'man of peace' and prides himself on negotiating savvy, not swordsmanship.
The standoff has led to an increasingly familiar Trump tactic: delay. Trump now says he'll decide by July 4 or so whether to aid Israel in its quest to destroy Iran's nuclear program and prevent it from getting atomic weapons.
During its first week of bombing, Israel was able to knock out much of Iran's air defense network, destroy many missile launchers, damage some nuclear facilities, and assassinate a number of Iranian military leaders. It's a humiliation for a nation with nine times the population of Israel and a fanatical regime that says the destruction of Israel is a foundational mission.What Israel apparently can't do, however, is destroy the Fordow nuclear complex, which is buried at least 250 feet beneath a mountain 60 miles south of Tehran. The only conventional weapon with a good shot of reaching that deep is the US GBU-57 'massive ordnance penetrator' bomb, which is so big that only American bomber jets can carry it.
So Trump has to decide whether to unleash a wave of B-2 bombers over Iran with the mission to demolish the Fordow complex. Armchair generals might see this as a simple one-and-done job. It's anything but. Iran would likely retaliate, threatening some 40,000 American service members stationed in the Middle East and possibly seeking to close the Hormuz Strait, a way station for 20% of the world's petroleum.
Trump needs a couple of weeks to think it over. But he's also seeking a way to get Iran to agree to limit its nuclear program through negotiations, which would fulfill his 'man of peace' declaration and avert a US war with Iran that could leave Americans dead and badly mar Trump's presidency.
This explains some of Trump's manic-sounding social media posts regarding Iran. Bellicose Trump threatened to assassinate Iranian leader Ali Khameini, saying, 'We know exactly where the so-called 'supreme leader' is hiding. He is an easy target.' He also said 'everyone should immediately evacuate Tehran,' as if American weapons were about to obliterate a megacity as densely populated as New York.
Yet, Reasonable Trump has been urging Iran to accept a deal he's been working on since he took office in January.
A Trump deal is only necessary because Trump scuttled the last deal with Iran, which former President Barack Obama finalized in 2015. Under that deal, Iran agreed to limit its nuclear weapons development in exchange for relief from punishing economic sanctions. Trump withdrew the United States from that deal, saying it was too soft on Iran. But he never got a better deal. The Obama deal was imperfect, to be sure. But all of Iran's recent progress on nuclear weapons came after Trump pulled out in 2018, and Iran may now be within weeks or months of building a nuke it could launch at Israel.
Trump may now think Iran is in a can't-win position. Israel represents not just the threat of force, but actual force that degrades Iranian capabilities each day. That lets Trump play the good cop, whose supposed nuclear deal offers a way for Iran to escape Israeli pummeling. And with the massive ordnance penetrator in his back pocket, Trump can threaten even worse punishment than Israel is delivering.
But Iran still might not cave.
It could relocate much of its nuclear material and gird for the destruction of Fordow. Some analysts estimate Iran could reconstitute its nuclear program within a year or two, especially if it forswears any cooperation with weapons monitors or nonproliferation regimes. Iran could also try to snooker Trump into a sweetheart deal, hoping he'll grasp at anything he can claim as a victory.
If nothing much changes by the end of Trump's two-week decision window, will dropping the big bomb be Trump's default position? Not necessarily. Trump could simply delay a decision by another two weeks or find some other formulation for basically doing nothing.
Delay, in fact, is becoming Trump's go-to tactic. Trump has thrice delayed the date by which social media platform TikTok must sell itself to a non-Chinese buyer or go dark in the United States. Congress passed a law requiring that last year, but it did give the president the leeway of postponing enforcement, and Trump has taken advantage of it. The new deadline is Sept. 17.
Trump also delayed the 'reciprocal' tariffs on dozens of nations reaching, in some cases, into the high double digits. Trump postponed those until July 9, saying that he expected to negotiate dozens of trade deals by then that would obviate the need for tariffs. As the deadline draws near, however, there have been hardly any announced deals.
A buoyant stock markets suggest that investors think Trump will delay those tariffs yet again.
But Trump also risks losing credibility with his counterparts if he always delays and never makes good on his threats. If Trump doesn't get the job done with Iran, the Islamic theocracy could hobble along as a wounded but dangerous combatant willing to take bigger risks. Trump will look like a bluffer who brags about a giant bomb he's afraid to use. He might discover that keeping America out of foreign wars doesn't make the nation better off, after all.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
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