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What Does Khamenei Do Now?

What Does Khamenei Do Now?

The Atlantic2 days ago

Remember when President George W. Bush stood in front of the huge Mission Accomplished banner to drive home the point that the Iraq War was over, before it was over? We seem to be in another 'mission accomplished' moment, only this time with adjectives. 'Obliterated' is how President Donald Trump describes Iran's nuclear program. 'Blown to kingdom come' is another term he used. Secretary of State Marco Rubio prefers 'wiped out.' CIA Director John Ratcliffe opted for the more sober 'severely damaged.' Of course, we still don't know where Iran's stores of enriched uranium are and how quickly its leaders could reconstitute a nuclear program, should they choose to. But we do know that U.S. leaders appear to be in a hurry to exit the situation. 'They had a war. They fought. Now they're going back to their world,' Trump said at this week's NATO press conference, leaving unsaid: And we will go back to ours.
This week on Radio Atlantic, the Iranian writer and Atlantic contributor Arash Azizi brings us into 'their world,' which seems to be waiting for new things to start. As Azizi sees it, Supreme Leader Ayatollah Ali Khamenei's days were already numbered before the bombings. Now these nine days of war have left him weakened and 'hiding like a little mouse' in a bunker. If this means a new future for Iran, which one? We talk with Azizi about the massive gap between the Iranian people and their leader, the failures of Khamenei, and the country's many possible futures, which could be better and freer, or much worse.
The following is a transcript of the episode:
Hanna Rosin: Donald Trump has said two very memorable things about Iran in recent days. First, this:
Donald Trump: We basically have two countries that have been fighting so long and so hard that they don't know what the fuck they're doing. Do you understand that?
Rosin: The second one was more subtle.
Trump: We're going to talk to them next week, with Iran. We may sign an agreement. I don't know. To me, I don't think it's that necessary. I mean, they had a war. They fought. Now they're going back to their world. I don't care if I have anything—
[ Music ]
Rosin: I'm Hanna Rosin. This is Radio Atlantic. That was Trump in yesterday's NATO press conference, after a reporter asked if he was going to talk to Iran now. The memorable part of what he said was 'They're going back to their world,' as in: We're going back to regularly scheduled programming.
And what about their world? Today we talk to an Iranian about how the nine days of war could change everything in that world—or nothing at all. Arash Azizi was born in 1988, a year after the current supreme leader, Ayatollah Khamenei, came to power.
Arash Azizi: So I was born the last year of the Iran-Iraq War, and that's really the last that Iranians had seen war and, you know, what it looks like. They had, I think, forgotten it, perhaps, this terrible feeling that there are, you know, bombs in the skies that might fall on you.
Rosin: Azizi is a contributing writer to The Atlantic and the author of What Iranians Want. In that book, he writes about a future that Iranian activists want to build for themselves, as opposed to the precarious future they're facing right now.
Azizi: I think, you know, a lot of Iranians will feel helpless because it's clear that decisions that are determining their lives, I know, are made in a lot of different places, but, you know, not by them.
Rosin: When Israel bombed Iran, Prime Minister Benjamin Netanyahu said something which really stuck with me. He said, 'The people of Iran must understand this is their moment. A light has been lit. Carry it to freedom.' Did it feel that way to you—like, this sudden opportunity? Or was your first thought, This is gonna make things worse? Just initially.
Azizi: Definitely it was that it's going to make things worse, and it's because it's something that is not hypothetical. We've thought about it for a very long time. You know, there were elements in the Iranian opposition who openly or semi-openly had been hoping for that to happen, and not just in the Iranian opposition. If I'm honest, there were people in Iran, people that I have known sometimes, who were thinking, Well, wouldn't it be great if Israel or the United States came out and took care of this regime and, you know, we could move on to a better life? I was always not only just skeptical; I basically thought that frankly foolish, because it was clear to me that this is not going to happen.
Rosin: What's 'this is not going to happen'? That it's not going to topple the regime necessarily?
Azizi: Exactly. That it's not going to topple the regime, certainly not going to topple the regime in a good way, right? As in leading to a democracy. It's very fascinating when we talk about, you know, these issues and people have debates. I always like to ask people, you know: 'Walk me through it. Like, what do you think is going to happen?'
So Israel starts hitting the heads of the regime, kills these military commanders, which it did. What's the next thing that will happen? Now, if we did have—hypothetically—if we had a large, organized opposition that was really ready to take power, you could imagine, Okay, they could use this opportunity to take power.
And even then, you know, they could have still been against the war and everything, but you say, Okay, realistically, this is an evil way of getting to something good, but you know, you can. But this was not the case in Iran. In fact, it was always clear to me, and I think it's clearer now, that it is the opposite, actually.
The attacks help sort of militarize the situation. They help sort of strengthen the security bodies. And while me and other democracy activists, we are always looking for a way out, the best way out of the bad conditions, the conditions are in many ways worse because of the attack. I'm trying not to be hopeless about it, and I still think that there is a moment of change in Iran that is still going on, and there are positive ways about it.
But yes, Netanyahu's claims that this would lead to some sort of a social uprising or that this would be an opportunity for people to topple the regime were always baseless. And if he really believed them, it would show that. If Israel has great intelligence penetration of Iranian society—obviously, sort of Iranian security services and all that—shows that it lacks understanding of Iranian society and politics. Although, my suspicion is that I don't think he actually believed that.
Rosin: So let's give people a better understanding of Iran and what's actually happening. Ayatollah Khamenei has been in power for 36 years. Is that right?
Azizi: He's been in power since 1989. I was born in '88, so that's, like, my entire life.
Rosin: Yeah, that's what I was going to ask you. Is he the only leader you have ever known?
Azizi: (Laughs.) I was 1 year old when Khomeini passed away. There are stories that I was 1 year old, and a lot of people around us were celebrating and all that. But I don't remember it.
Rosin: So what was your impression of him, growing up? Or how did it evolve over time? Those 36 years, your whole life.
Azizi: I mean, I think Ayatollah Khamenei has been a total failure. And Iranians really think about their history in terms of hundreds of years and thousands of years, right? So when I say he's been a failure, I don't mean he's been the worst leader since the 20th century. I think he's been one of the worst. Like, trying to find someone worse, we need to go back to the last king of the Safavid empire in the 18th century, perhaps. And the reason for that is his track record.
It's quite clear to me what happens. He was a young revolutionary in the '60s and '70s, and like a lot of people in that era, they wanted to change the world, and they were happy to sort of destroy human societies in their paths, sometimes with good intentions, you know, sometimes otherwise. He happened to be part of one of the few experiments in the '60s and '70s that actually won, the Iranian Revolution. And he comes to power as part of the 1979 revolution, and later on as leader in 1989, and he borrowed our country for his Islamist cause.
Rosin: Did you say, 'He borrowed our country'?
Azizi: Yeah. That's sort of the expression I use because, you know, the revolution had genuine popular support in 1979. But throughout the years—certainly, I would say, since the '90s, since the mid-'90s— the population is not revolutionary. They're not supporting these goals of Ayatollah Khamenei, which is what? Which is two things really: To turn Iran, first of all, into a model Islamic society. This model society of Ayatollah Khamenei is one in which women happily wear the veil; men and women don't look at each other, you know, in a way that they would be attracted to each other; is one in which everyone is working toward good Islamic values, as he understands them. And it's been an utter failure on that count, right?
Rosin: How do you know? I mean, how do you know that it's an utter failure, that the population is not in support of him?
Azizi: Well, I think number one, the thinkers of the regime themselves say that. And not only is Iran not a model Islamic society; it's one of the most anti-religious societies in the world. I think, you know, people would be shocked—and they are shocked when they go to Iran and see it. Now, of course, you know, there are devout Muslims, you know, my grandmother included, right? But the kids born after us, they don't care about religion at all. Sometimes, frankly, they're even a little nihilistic, I would say. They could not be further from the image that Ayatollah Khamenei wanted of this Islamic sort of model.
And look—Iran is a country of 90 million. There are differences. There are, obviously, devout people. There are people with different texts. But by and large, this is a society that, really, it couldn't be further from what Ali Khamenei wants. I mean, you know, according to his ideals, he wanted to ban most forms of music in some way. You know, Korean pop bands are super popular in Iran, like everywhere else. There is just, like, a total cultural defeat. And they've recognized that. If you read regime bodies, what they're saying is, We need to give up on this. We know we've lost, because they see what their own sons and daughters are doing.
Rosin: It's funny because from a distance, if you just take the flattest image of Iran—I'm not saying many Americans know that much—it's, like, a country where there are older clerics who rule, and 'Death to Israel, ' 'Death to America.' That's sort of the shorthand for what happens in Iran.
Azizi: Yeah, and that is the sort of ruling regime. I would say that's not even necessarily a good picture of the ruling regime. And we can talk about it a little bit because, yes, you know, Khamenei believes in death to America and death to Israel, I have no doubt. But that's not true of the rest of the Iranian regime.
I would actually say that, you know, figures in the Iranian regime that I talk to sometimes for my reporting, they always send their kids to Europe and America. This actually goes back to your earlier question as well. So how do I know this is a total culture failure? Where do the sons and daughters of these leading figures of the regime go? They come here. They go to Europe. Let's go look at their Instagram. You know, what are they doing? They're, like, posting about Justin Bieber.
Rosin: (Laughs.)
Azizi: And there are tons of examples like that. The anti-Westernism is a total cultural failure.
Rosin: Is this just the upper classes you're describing? Like, are you describing just rich Iranians?
Azizi: Absolutely not. I'm describing Iranians across the board. In fact, it's sometimes the other way around because if you're college educated, like I am, you might be a bit more skeptical of the West. Like, that's actually a very Western thing, as a college-educated Westerner would be on different levels.
I think there is a base for—let's say radical anti-Westernism has a base in Iranian society. I think if it organized itself politically, it could be, like, maybe 10 or 15 percent of Iranian society, but there's such a small minority. You know, you can look, for example, in the last couple of years on the anti-Israel issue. Isn't it interesting that genuine, mass organized, let's say anti-Israel demonstrations—they happened in dozens of cities in the United States. They happened in dozens of cities in Europe. They obviously happened all over the Middle East. They did not happen in Tehran.
Just a few weeks ago, before the current war, a group of students—sort of leftish students at the University of Tehran—tried to organize a sort of anti-Israel demonstration, and with very beautiful, good intentions on a large part, right? I don't want to diss them. It's a very global cause. They made sure there were people who came without the hijab, right? They didn't want it to be a proregime thing, and, like, 20 people showed up.
Rosin: That is very telling, that at the exact historical moment when it is perhaps the easiest to organize an anti-Israel demonstration, the country that is the originator of 'Death to Israel' can only get 20 people to an anti-Israel rally. That's telling.
Azizi: Yeah, because people don't support it. And people don't support it, by the way, for very basic reasons. They don't support it because, first of all, they don't see Iran as a party to the Israeli-Palestinian conflict, because we're not, regardless of what we think about it. So Dariush Ashoori, this Iranian socialist intellectual after the 1967 war, you know, he's in a debate with someone else, and he says, The Israeli-Palestine conflict to us is like, I think he says, the Ethiopian-Sudanese conflict, something like that.
Azizi: Exactly. And it's something that we don't have a stake in.
Rosin: The people?
Azizi: Well, the Iranians. He's saying it from a perspective of Iranian people.
Rosin: Wow. This is, like, a very different picture than the picture you get just reading headlines.
Azizi: Yeah, and you don't need to take my word for it. Again, you know, all you need to do is talk to an average Iranian. They talk about it like someone in Europe. So in the U.K., you have people who become very anti-Israel, perhaps, and criticize and become very, you know, pro-Palestine or not, right?
But you also have the opposite, just like somewhere in Europe. My point is: People don't have a direct stake. And the other thing that is important, related to that: They surely don't want the regime to spend their treasures on this conflict and to bring them now, as it has in the last two weeks, to a direct conflict.
It's not because they don't care for the people of Gaza. It's that they don't like the way they're being used. And they don't see it as enlightening in national interest, because it isn't.
[ Music ]
Rosin: So the leader and the people are at odds. And now the country is at a crisis point. What does that mean for Iran's future? That's after the break.
[ Break ]
Rosin: Okay, so let's understand what this adds up to. You're saying cultural alienation from what the priorities are of the leadership. Just visually right now, the leadership, and by which I mean Khamenei himself, seems pretty isolated. Like, literally, he's in a bunker somewhere. Many of his top generals are dead.
What are you hearing from Iran, then, about what his state of mind is? Because on the one hand, you said the activists are not organized—like, there isn't some organized internal opposition ready to overthrow him. On the other hand, he's pretty isolated, both from his own culture, his own generals. So where is he?
Azizi: So we are talking on Wednesday morning, a few days after the United States finally attacked Iran, and a few days after the cease-fire and the commander in chief, the head of the state, the grand Ayatollah Khamenei, the leader of the revolution, you know, he is hiding like a little mouse somewhere.
We don't know where he is. He hasn't shown his face. He's given two speeches since the war with Israel began on June 13. If you look at the headlines, there was all this about 'the defiant speech,' but if you actually listen to the speech and you speak Persian, he does not appear anything like defiant. He really looks like someone who they forced to record—almost like a forced video. He like looks tired and defeated.
Rosin: So you just mean his tone. Like, his tone didn't match his words?
Azizi: His tone didn't match his words. Especially, if—we remember this guy, right? You asked me, sort of, if I grew up with him. I remember a time when he was an impressive figure in some ways. He's a good rhetorician. He's 86, so, I mean, he was going to die soon anyways, right? We are all waiting for that, frankly. Iran has been now in a total waiting [period] for years for this guy to drop dead.
Rosin: There was a term I heard that someone used, which was 'a zombie regime.'
Azizi: No, certainly. Yeah, a zombie regime. And when I go take a shower, and I come out in half an hour and I haven't looked at my phone, I always have this fantasy that I open it and Khamenei has died, right? So we're really waiting for this moment to arrive. But he's now finished in some very real ways. There is a ferocious conflict in Tehran over the future, some of which we've reported on in The Atlantic, about sort of the plots that are going on to replace him. So he's finished.
But you actually posed that excellently. So the opposition is not organized. Khamenei, as a person, is finished; his policies are total failures, right? I mean, just to recapture it very quickly: His policies have brought Iran economic destruction, international isolation, domestic repression, and now a direct war—and hundreds of Iranian civilians are dead because of that war. So he's finished; the opposition is not ready to take over. So who? You know, who's now calling the shots?
Rosin: So tell us the options. Does he have a succession plan?
Azizi: So according to the letter of the Iranian constitution, the supreme leader—this is a very strange position, so very briefly I'll explain. The supreme leader is a sort of made-up English term that we use. The real term there is the guardian jurist. Basically, the closest example to it is not in Islamic text, but it's from Plato's Republic. It's the philosopher king.
The reality is: There is nobody with those qualities, really, who could be the third supreme leader. So there's a very real possibility that Khamenei will actually end up being the last one, that this position will somehow be abolished, and there would be a constitutional transition.
But if it wasn't abolished, some of the main candidates that are being talked about—surprise, surprise—one of them is Mojtaba, his son, Mojtaba Khamenei. But further surprise, supporters of Mojtaba Khamenei are not selling him as a continuity candidate of his father, knowing that that would be a losing bet. They're actually doing the mirror opposite of that—they're comparing him to [Mohammed bin Salman], the crown prince of Saudi Arabia, as someone who would be a rejuvenating figure who would take Iran away from the clerics and from the anti-Westernism, to a more sort of nationalist path and would open things up. They're selling him as a change candidate.
Rosin: And you, who call yourself a democracy activist, can you get on board with that? Do you see him as a change candidate?
Azizi: I can't get on board with Mojtaba, because we don't know anything about him. He's an entirely shadowy figure. Like, when I say we don't know anything about him, like, there's not a single speech of this guy you can find anywhere. There's a speech of him, because he teaches at Qom. As a cleric, that's what you do, right? So you teach others religious stuff in seminaries in the holy city of Qom, near Tehran. And he stopped teaching, actually, mysteriously last year. So it's entirely vibes. And actually, it's funny: In 2009, when they say Mojtaba, it really felt like something that your weird uncle or, like, the taxi driver would say. But now it's a serious thing.
Rosin: So they're coming up with a narrative about him. They're trying to package him or sell him. So that's over there. That's a mystery. What's another option?
Azizi: So there's a possibility of an actual hard-liner, who would actually be Khamenei continuity—as in anti-Westernism, anti-Israelism, Draconian domestic policy and repression. But I think it's quite likely that they're going to have to move in a pragmatic direction. And what do I mean by pragmatic? I think they're going to lessen domestic repression, not politically but socially, if you know what I mean.
Rosin: Which would look like what?
Azizi: Which would look like most authoritarian countries in the region that are, you know, Politically, you can't organize, but you want to go out and have a drink? That's okay. You want to not cover your hair? That's okay. The kind of domestic repression that exists in Iran and, frankly, doesn't really exist elsewhere in the world to the same degree.
Rosin: So there's some release? This is what people say—like, Iran is a country where you can't even have a cultural release, a social release, dance, drink, whatever. So that gets loosened.
Azizi: That's very important to remember. Iran is a country in which all of us have these memories, right? You're walking with a woman and you could be arrested, you know, asking what your relationship is.
In fact, I was once stopped, working with my mother, and asked, What is your relationship? My mother was very happy.
Rosin: (Laughs.) Yeah, that's like a compliment to your mother.
Azizi: Yes, it was. But it was a sort of a horrifying thought. I also remember my mother and father getting stopped once, and then they started fighting, and the guy said, Well, only a real married couple could fight like this. Definitely genuine.
Rosin: (Laughs.)
Azizi: So it's very important. It's like the daily humiliation and repression in Iran is very important, and that would be lifted. And I think the foreign policy of Iran, I think ultimately, these guys don't share the revolutionary aspirations of Khamenei. They want integration into the Western economy. That's really what they want.
But I'll tell you why it is delicate: Because they want integration to the Western economy, however, the part that introduces another element to it is that they've also been restrained effectively by Khamenei, who was the grand ideologue of anti-Westernism, but he was also a very cautious—actually, I would say cowardly—man who said all these things but never got Iran into a conflict with these countries.
So these guys are less cautious, sometimes more trigger happy, as it often happens with, you know, younger generations of military folks. And they're Iranian nationalists, as opposed to Islamists. But that also means that they would want Iran to play a role in the region and to sort of stand for something.
Rosin: Let me just summarize, so I understand. So we have, on the one hand, the kind of nepotistic regime; that's the son. On the one hand, we have the hard-liners; that's the least possibility. This last category you're describing, we're just calling pragmatics, of all kinds. They can be military. They can be businessmen. They're just the sort of people advocating for a pragmatic future, which would mean economic integration, also might mean a little regional arrogance.
Azizi: Let's call them 'developmentalist.' I mean, that's what they really want, is for Iran to be developed. They were salivating—when Trump was in Riyadh and gave his speeches, the entire Iranian political sphere was looking to Riyadh and thinking, This is who we want to be. We want the American president to come and say, you know, 'Invest in us, and we'll invest in you, and we'll do AI, and we'll do nanotechnology.' I mean, this is who these people are.
And I want to clarify the Mojtaba nepotistic part. You know, that's a bit of a dark scenario we don't know. But a lot of the people who are supporting him are also some of these developmentalists. So some of the developmentalists are supporting him; some of them are not. So there really is—I would say, majorly, there's two futures.
There are the hard-liners, which I see as a little possibility. And there's developmentalists, but developmentalism can go in different directions and can lead to different choices. And also, the contradictions need to be understood. So a lot of these developmentalists, for example, would've traditionally been in favor of nuclear talks, a nuclear deal like we had in 2015, like the talks that were going on early on this year, and hopefully they might go on again. But some of them are actually in favor of having a nuclear weapon, because you know, they see, Well, maybe this is the only way, you know, Iran can be sovereign, blah, blah.
What I'm hoping is that they'll understand the contradiction in that position—that, you know, as an Iranian, for me, I think the pursuit of a nuclear weapon is going to be a disaster for Iran.
Rosin: So in all the scenarios that you've laid out, you haven't really mentioned democracy. You've mentioned the lifting of cultural repression and a better life. But the thing that you seem to care about is democracy. So what's the future of that?
Azizi: That's an excellent question. I will always fight. I have one life, and, you know, to the day I die, I'll fight for democracy for Iran and figures that I support in the Iranian political scheme—if you will, people like Mostafa Tajzadeh, a former deputy military minister who is now a political prisoner in Evin Prison. His reaction to the war: He called for cease-fire and a democratic transition. So there are people who are calling for these things.
I hope those of us in the Iranian opposition can get organized and offer a real alternative and make this vision true. But you notice in that, hope is doing a lot of the work in that sentence.
So do I think this is a vision that could happen in the next few years? I hope with all my being that I'm wrong, but I don't. I think the movers and shakers of Iranian power are now these factions of the regime, and they're not interested in democratization, because why would they be interested in giving power away?
And frankly, let's be honest with each other, Hanna: This is not exactly a moment of democratic flourishing anywhere in the region, right—anywhere in the world, actually, but also anywhere in the region. The Arab Spring, after all, did not lead to the establishment of democracy anywhere but in Tunisia, and that got overturned.
Now, I do think there are more prodemocracy aspirations in Iran, but I think before we can have democracy, we first of all need two things. We need basic safety and security of our bodies. And secondly, we need prosperity. Like, we need a way to make a living, right? It's funny: I used to ask my students, you know, 'Which one would you prefer: prosperity or democracy?' And of course, a lot of them are high-minded; they would say 'democracy.' Then I'd say, 'Where would you prefer to live: Senegal or the [United Arab Emirates]?' And of course, they all say UAE, right? And so I think that those are the realities. Democracy is sometimes not necessarily a priority.
Rosin: Last question: Just as we've been talking, President Trump was speaking at a NATO conference and insisting that the strike completely obliterated Iran's nuclear program, which he's been saying all along, despite some U.S. assessments that it was only set back a few months. So what does it change in terms of Iran and its future if it is only set back a couple months?
Azizi: It's not true that the Iran nuclear program has been destroyed. I mean, that much is clear there. Iranian enriched uranium remains at large, and Iran has different pathways. And the most dangerous thing is that Iran now has pathways to not collaborate with the International Atomic Energy Agency, so people wouldn't know, even, you know, what it was doing.
And it gives huge Saddam vibes, and we know where that ended and where that went. And, I mean, Saddam from, like, the '90s onwards. I think the proponents of Iranian nuclear weapons do exist in Iran. They exist, even surprisingly, in sections of the establishment who might not be hard-liners, even some on the Iranian street. But I think this shows the necessity of nuclear talks. The only durable way to get the nuclear threat of Iran defanged is a nuclear deal that would commit Iran to not go for a nuclear weapon, and that would incentivize Iran not to do that.
Rosin: Right? So the real solution is not a military-strategic solution. It's a political solution.
Azizi: Absolutely, because it's the only way that Iran could commit to not getting nuclear weapons. And look—this will also include seriously degrading Iran's nuclear capabilities. No one is saying not to do that. Any part of a deal is that you've got to close off a couple of nuclear plants. There's no doubt about it. Most importantly, you've got to increase inspection by the IAEA, the UN nuclear watchdog.
But ultimately, whoever is ruling Iran should not want to have nuclear weapons. If they do want to have nuclear weapons, they'll find pathways to it.
Rosin: Arash, thank you so much for giving us the view from inside Iran.
Azizi: Thank you so much.
[ Music ]
Rosin: This episode of Radio Atlantic was produced by Jinae West and edited by Claudine Ebeid. We had engineering support from Erica Huang. Claudine Ebeid is the executive producer of Atlantic audio, and Andrea Valdez is our managing editor.
Listeners, if you like what you hear on Radio Atlantic, remember you can support our work and the work of all Atlantic journalists when you subscribe to The Atlantic at TheAtlantic.com/listener.

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Revised first-quarter GDP, released earlier in the week, showed the economy contracted by more than previously believed between the beginning of January and the end of March. Then on Friday, new data showed personal spending declined in May for the first time in four months, while a reading on core inflation came in slightly hotter than expected. Although the inflation reading didn't exactly move the needle, Federal Reserve Chair Jerome Powell did say during congressional testimony earlier in the week that he expected tariffs to start to show up in the inflation data some time this summer. So far, investors have been mostly happy to tune out the constant noise regarding the administration's trade agenda as the Trump team pursued its goal of '90 trade deals in 90 days' as first touted back in April, O'Rourke said. In late May, Trump announced plans to slap a 50% tariff on E.U. imports, before quickly backing down after European leaders promised to speed up talks. Pain for stocks during that episode was pretty short-lived. On Friday, Commerce Secretary Howard Lutnick said during an interview that the U.S. and China had completed an accord negotiated last month in Geneva, and added that deals with 10 major trading partners would be announced imminently. Investors will be keeping a close eye on how things go with Canada, and a deal with the E.U. remains top of mind as well, O'Rourke said. Given Trump's unpredictable nature, it is impossible to say with certainty what might happen next. O'Rourke thinks there is almost no chance that Trump will allow the 'liberation day' levies to return. Indeed, Trump himself said earlier that he might not stick to the deadline. But with so much about Trump's trade agenda still up in the air, investors may want to consider taking some chips off the table. 'It's very easy for the tariff situation to come back into play, and this could be the first shot across the bow here,' O'Rourke said about Trump's decision to end talks with Canada. 'The way investors have to look at this is: Do you want to roll the dice here?' The S&P 500 SPX gained 32.05 points, or 0.5%, to finish at 6,173.07 on Friday — a record close, and the index's first since Feb. 19, Dow Jones Market Data showed. The Nasdaq Composite COMP rose by 105.55 points, or 0.5%, to 20,273.46, its own first record close since Dec. 16. The Dow Jones Industrial Average DJIA also finished higher, although it remained shy of record territory. The trade truce between the U.S. and China, strong consumer-confidence data from the University of Michigan, and investors' positive reaction to earnings from Nike Inc. NKE were just some of the factors that helped push stocks higher on Friday, according to Farzin Azarm, a managing director at Mizuho Securities USA. Reports about a coming U.S.-E.U. trade deal and an administration plan to boost energy availability for the purpose of powering the expansion of artificial-intelligence technology also helped, Azarm noted. 'I am horrified': My company won't allow me to tip more than 15% for Ubers. Do I explain this to the driver? JPMorgan has a new way of forecasting the stock market — and there's a surprising finding My cousin died before claiming his late father's $2 million estate. Will I be next in line for this inheritance? S&P 500 scores record high for first time in 4 months. What could push stocks higher from here? Coinbase's stock is up over 40% this month as Wall Street projects amazing profit growth

Goldman Sachs warns tariffs won't help the U.S. boost manufacturing productivity as tech in American factories continues to lag
Goldman Sachs warns tariffs won't help the U.S. boost manufacturing productivity as tech in American factories continues to lag

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Goldman Sachs warns tariffs won't help the U.S. boost manufacturing productivity as tech in American factories continues to lag

U.S. manufacturing has decelerated recently, both as a result of increased competition from China and as part of a broader manufacturing productivity slowdown. Goldman Sachs analysts argue tariffs will not lower supply chain and labor costs enough to boost reshoring, and instead, increased automation will be the most likely driver of a manufacturing productivity boost. As China continues to best the United States in manufacturing capabilities, tariffs may not be America's best bet to boost factory productivity. Instead, the U.S. should look to AI and automation to gain an edge in manufacturing, Goldman Sachs analysts argue. President Donald Trump aspires to return factory jobs to American shores by imposing steep tariffs on U.S. manufacturing rivals, but the taxes can only incentivize reshoring so much, analysts said in a note published Thursday. Instead, manufacturers should look to automation and the ever-more-accessible artificial intelligence as their best chance for boosting domestic manufacturing. 'A pickup in the pace of innovation—potentially from recent advances in robotics and generative AI—therefore remains the catalyst most likely to reverse the long-run stagnation in manufacturing productivity,' analyst Joseph Briggs and colleagues said in the note. As China capitalizes on automation and cheaper labor to grow its export footprint, the Bank of America Institute has found mounting evidence of a recent U.S. manufacturing slowdown, including U.S. Census Bureau data showing new orders for manufactured durable goods decreasing 6.3% in April. The Institute of Supply Management Manufacturing Purchasing Managers' Index (PMI) has fallen since March, also indicating a contraction. The U.S.'s productivity woes are part of a larger manufacturing productivity slowdown happening over the last two decades as a result of investment pullback following the global financial crisis, as well as a slowdown in the burst of technological advancements of the early 2000s, according to Goldman Sachs. Trump's tariff plans for China—which the president has not disclosed, despite touting a new trade deal—aim to help the U.S. claw back manufacturing opportunities from its economic rival. But while they make consumers' lives more expensive, they are not a panacea for manufacturers, the bank argued in its note. 'Tariffs are unlikely to result in much reshoring because production costs in other countries are well below the U.S.' for most products (even after accounting for tariffs), and China will likely continue to grow its exports on the back of cost advantages and industrial policy support,' the note said. Instead, analyst Briggs said, the U.S. should focus on another area in which it's lagging: automation. The U.S. has trailed other manufacturing giants in implementing AI into factory operations, according to a Boston Consulting Group (BCG) Henderson Institute report released earlier this month. Only 46% of U.S. respondents of BCG's Global Manufacturing Survey of 1,000 manufacturers reported multiple use cases of AI in their plants, falling short of the 62% average and lagging behind China's 77%. 'This is one of the key technologies that I think could drive productivity growth in a cost-competitive manner,' Briggs told Fortune. 'And we just haven't seen that occur on a meaningful scale yet.' The U.S. did not previously invest in factory automation as a result of a 'hangover' from the global financial crisis, Briggs said, but the U.S. now has a real shot at prioritizing factory technology updates, given the growing ubiquity and therefore affordability of automation and AI. Companies such as aviation precision parts-maker MSP Manufacturing have already begun to adapt accordingly. MSP president and chief operating officer Johnny Goode recently learned of an AI-powered software able to program the machine building the precision parts, reducing production time from an hour and a half to seven minutes per part—plus 15 minutes necessary for a human operator to refine it. 'I was like, holy snap, this is going to be a game changer,' Goode told Fortune's Jeremy Kahn this week. 'Going from 90 minutes to 22 minutes is a big deal, and we've seen that get even better as we've learned to use the software more.' Goldman Sachs analysts conceded that while automation provides the largest area for growth in manufacturing productivity in the U.S., it is unlikely to solve the broader manufacturing slowdown, which is global. The slowdown is 'historically unusual,' Briggs said, with the maturation of the tech sector the likely culprit. Any hope for a global uptick in productivity would come from mass advancement and adoption of AI and robotics on a large scale. 'The main thing that would drive a large pickup in manufacturing productivity and manufacturing growth would be a sharp increase in the pace of innovation,' Briggs said. 'And this type of inflection upwards and technological progress are very hard to predict.' Advancement in tech could have a two-fold benefit for domestic manufacturing productivity, both in driving factory investments and in bettering technology to be installed in factories to automate tasks. But with the specifics of the future of AI and automation applications still unknown, it's difficult to predict whether a reversal of a domestic manufacturing slowdown is truly possible. 'We just need to see it happen before we have a lot of confidence in that dynamic being a big driver,' Briggs said. This story was originally featured on

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