The global trade landscape came into greater focus this week with the announcement of two separate Section 301 investigations by the Office of the United States Trade Representative (USTR). Concurrently, Operation Epic Fury is now in its 15th day and shows no signs of abatement from any side. Below is our updated analysis of the week’s key data, the unfolding events, and what’s ahead.
TRADE UPDATE
Section 301s
With the post-IEEPA Section 122 tariffs a temporary bridge, the Trump Administration laid bare a sizeable portion of its more long-term and durable tariff apparatus on Wednesday and Thursday, announcing widespread Section 301 overcapacity and forced labor investigations, respectively.
USTR Ambassador Jamieson Greer said he would aim to complete the probes by mid-July when the temporary 122 tariffs expire. Compared to prior 301 investigations, these are on a compressed timeline and blend manufacturing practices with individual countries. The public comment period has already opened for the forced labor investigation and runs until April 16, while the overcapacity investigation comment period opens March 17 and will close April 15. Public hearings will begin April 28 (forced labor) and May 5 (overcapacity).
Announcing the latest 301 investigation, Ambassador Greer observed, “The tools may change, depending on the vagaries of courts and other things, but the policy remains the same.” 16 economies were named under the overcapacity investigation: China, the EU, Japan, India, South Korea, Taiwan, Vietnam, Mexico, Indonesia, Malaysia, Cambodia, Thailand, Bangladesh, Singapore, Switzerland, and Norway. The forced labor investigation, however, extends to nearly all of the United States’ largest trading partners (60 countries in total).
The Administration is planning additional investigations in the future, with digital services taxes, pharmaceutical pricing, and rice/seafood as potential targets. Of note, the previous IEEPA tariffs exempted goods covered by Section 232 tariffs (i.e., they did not stack). Asked how these new 301s would interact with existing 232s, Greer said it was too soon to tell, but that the Administration did not want to “complicate” tariff compliance for companies.
USMCA
Mexico’s inclusion in the Section 301 overcapacity investigation and Canada’s absence is not incidental. The investigation’s framing-manufacturing overcapacity evidenced by large, persistent trade surpluses-maps directly to Mexico’s $197 billion goods deficit with the U.S. in 2025. A trade imbalance driven principally by autos, Mexico is the world’s fifth-largest producer and ships roughly 80 percent of its output to the U.S. market, a factor that is clearly in President Trump’s crosshairs. As Greer pointed out, the investigation is aimed at those partners who “have developed production overcapacity that is really untethered from the market incentives of domestic and global demand.”
Canada runs a deficit as well, but its composition is energy-heavy. Moreover, the Canadian deficit decreased substantially in 2025 to $46 billion, a 25 percent drop. The Iran operation adds a further dimension in Canada’s favor-not only did Canada publicly back the strikes, but it holds meaningful energy supply at a time it is most needed.
More importantly, the Chinese transshipment concern is much greater with Mexico than it is with Canada. Chinese manufacturers operating in Mexico can route goods to the U.S. with minimal transformation and at tariff rates well below what direct China-origin shipments face, creating a transshipment arbitrage that Mexico benefits from. USTR has flagged the issue repeatedly and the 301 Federal Register notice specifically cites it.
Greer declined to clarify how the 301 findings would interact with USMCA obligations when asked. These investigations are properly viewed as a threat, not yet a tariff. Adding to the leverage-seeking signal, USTR announced the investigation on the same day it launched the first formal round of USMCA bilateral review talks with the Mexicans. Thus, the message is clear-Chinese transshipments and rules of origin enforcement are key to the U.S./Mexico negotiations from the American side. The forced labor investigation, on the other hand, will help the Administration balance the overall numbers with respect to its global reciprocal trade agenda writ-large, with the loss of fentanyl tariffs creating a hole to fill with respect to both Canada and Mexico.
Donroe Doctrine
Last weekend, the “Doral Charter” was signed in Miami, formalizing a U.S.-aligned counter-cartel coalition. Signatories were Argentina, Bolivia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guyana, Honduras, Panama, Paraguay, and Trinidad and Tobago. Chile attended but did not sign; its president-elect unable to commit ahead of taking office.
The three consequential absences to the Charter were Brazil, Colombia, and Mexico. The coalition’s practical reach without them is limited, but its political significance is real: the signatories represent a public declaration of Western Hemisphere alignment more clearly than any prior framework.
Cuba is the variable that most directly pressures the holdouts. Cuban President Miguel Díaz-Canel confirmed recent talks with the U.S. on “finding solutions to bilateral differences” during a speech Friday morning, marking the first time Havana has acknowledged meetings between the two countries. Negotiations are being led on the Cuban side by Díaz-Canel and Raul Castro’s grandson, Raul Guillermo Rodriguez Castro, who recently met with U.S. officials in the Caribbean.
In perhaps a sign of goodwill, the Cuban Foreign Ministry announced the release of 51 prisoners on Thursday night. If the Administration replicates in Havana what it achieved in Caracas-pro-American regime realignment through sanctions, legal pressure, and political isolation-Colombia loses one of its most important ideological anchors. A post-Castro Cuba narrows its room further.
Brazil and Mexico retain leverage, however, and operate on their own terms. Brazil President Luiz Inácio Lula da Silva faces an October presidential election and has a political disincentive to accommodate Washington. Politics, combined with a robust trading base and Chinese alignment, make Brazil the most complex of the Latin holdouts for Washington to negotiate with.
Meanwhile, Sheinbaum is saddled with a growing list of domestic constraints that create a rhetorical tightrope for her to navigate in U.S. talks. To name just a few of Mexico’s most pressing domestic challenges: stagnant growth, cartel violence with an approaching World Cup, unrealized steel and aluminum tariff relief, growing water quotas, and balancing the political necessity of sovereignty with ongoing U.S. military incursions in Latin America.
Miscellaneous
- China: The oil shock compounds China’s export headwinds. Disrupted shipping, rising fuel costs, and softening global demand will weigh on manufactured goods exports, adding further downward pressure to a growth target Beijing has already conceded is the lowest in a generation.
- Critical Minerals: The U.S., Japan, and the EU have announced plans to develop Action Plans for critical minerals supply chain resilience, with USTR heading efforts to set border-adjusted price floors and tariffs to counteract market distortions by China. Ambassador Greer is expected to begin formal negotiations in April, following a March 19 public comment period that will coincide with Japanese Prime Minister Sanae Takaichi’s visit to the White House. The plan is expected to closely resemble the critical minerals deal signed with Mexico.
- European Union: The European Parliament has a trade committee vote on the EU-U.S. Agreement (the “Turnberry Deal”) scheduled for Thursday, March 19, with full body approval targeted for March 26. But INTA Chair Bernd Lange publicly cast doubt on the vote following the recent Section 301 announcements, stating the Parliament is “still deliberating.”
- India: In an effort to gain more market share from China on smartphone production, India is drafting manufacturing incentives that link government subsidies to exports of locally made components. The move will benefit Apple, Samsung, and their suppliers, with an eye on Apple’s forthcoming foldable iPhone.
- Ireland: During his annual St. Patrick’s visit to Washington this week, Taoiseach Micheál Martin plans to pledge over $6 billion in U.S. investments, per the Wall Street Journal, comprised of $5 billion from Smurfit WestRock, $1 billion from Kingspan, and $100 million from Glanbia.
Coming Attractions
- U.S./China trade team talks in Paris, France (March 15-16)
- FOMC meeting (March 17-18)
- Japanese Prime Minister Takaichi White House visit (March 19)
- European Central Bank (ECB) and Bank of England (BOE) meetings (March 19)
- Trump/Xi Summit in Beijing, China (March 31-April 2)
- IMF/World Bank spring meetings in Washington, D.C. (April 13-18)
- G7 meetings in Haute-Savoie, France (June 14-16)
- NATO Summit in Ankara, Turkey (July 7-8)
GEOPOLITICAL UPDATE
War Progression
The whipsawing oil market puts a finer point on the story of the week: the war’s duration. Seeking to quell market volatility, President Trump told Axios mid-week that there is “practically nothing left to bomb in Iran.” This followed his comments to House Republicans in Miami earlier in the week, declaring that hostilities would end “soon.”
To be sure, there are signs of meaningful progress. According to the Washington-based Jewish Institute for National Security of America (JINSA), Iran launched 428 ballistic missiles on February 28, the opening day of the conflict. By March 10, that figure had dropped to 27, a 94 percent decline. Missile launches fell further on March 11 to 20, the lowest single-day total of the war. Drone launches, which stood at 345 on day one, followed the same downward trajectory. All told, Iran’s ballistic missile launcher infrastructure has lost roughly two-thirds of its pre-war capacity.
The IRGC flatly rejects the framing, however, declaring “it is we who will determine the end of the war” and claiming that President Trump-not them-is the one who has been seeking a ceasefire through intermediaries. In fact, the Iranian side has been feigning strength as of late, demanding that airstrikes stop before it entertains a cease-fire. Further demands include guarantees against future attacks (with Russia acting as mediator), reparations for damages, and U.S. forces permanently exiting the region.
According to Iranian national security official Ali Larijani on Thursday, “We will not let you off until you accept your mistake and pay the price for it.” An IRGC post on X went further, implying a personal threat against President Trump and raising questions about his travel (worth watching with the Beijing summit scheduled for March 31-April 2).
Regardless, a quick U.S. exit does not seem likely. The Wall Street Journal reported on Friday that Secretary of War Pete Hegseth has deployed additional U.S. Marines to the conflict, along with the USS Tripoli amphibious assault ship. Friday evening, President Trump confirmed that U.S. Central Command had “totally obliterated every MILITARY target in Iran’s crown jewel, Kharg Island” but not “the Oil Infrastructure of the Island.” Even if the U.S. were to ramp down operations in the near-term, there is no guarantee of an end to hostilities as Israel appears intent upon pursuing a long war.
Regime change may no longer be realistic, however. An unnamed senior Israeli official on Wednesday conceded to Reuters that Israeli leaders have privately accepted that Iran’s ruling system could survive the war. Prime Minister Benjamin Netanyahu acknowledged the sentiment publicly on Thursday, saying, “I can’t tell you with certainty that the Iranian people will bring down the regime.” According to The Wall Street Journal, Iranian-Kurdish armed groups believe IRGC forces remain strong and the conditions are not yet viable for a public uprising.
Since his selection last Sunday, newly installed Supreme Leader Ayatollah Mojtaba Khamenei has not appeared on video nor been seen in public. Two factors likely explain his absence-communications that could risk revealing his location and severe injuries suffered on the opening day of the operation. Of note, Khamenei’s mother, wife, and a son were all killed in the same opening-day strikes. Iranian officials have told The Wall Street Journal that Khamenei is “alert and sheltering at a highly secure location.”
The combination of injury and security constraints raises the question of who is directing Iranian war decision-making. When pressed by Iranian media, Foreign Ministry spokesman Esmail Baghaei did not answer directly, stating only that “those who have to receive the message have received the message.”
Perhaps sensing Khamenei’s absence could show weakness, state television read the new Supreme Leader’s first “statement” on Thursday. The statement doubled down on the Hormuz closure as a “tool to pressure the enemy,” threatened attacks on all U.S. bases in the region, signaled escalation into unspecified “highly vulnerable” new fronts, and demanded damages.
Notably, Khamenei said he had learned of his own appointment from state television, an admission that raises further questions about the coherence of the succession process. The command ambiguity is not merely optical-Iranian President Masoud Pezeshkian had ordered forces to halt attacks on neighboring states unless Iran was attacked first, yet drone and missile strikes on Gulf countries have continued.
Shipping
The Iranian threats to vessels in the Persian Gulf and Strait of Hormuz remain active: the UK Navy confirmed three vessel strikes; Oman reported the targeting of a Thai-flagged cargo ship; and the Marshall Islands-flagged Safesea Vishnu and the Malta-flagged Zefyros oil tankers were hit in Iraqi waters.
Significantly, the conflict has expanded this week from Gulf waters into regional ports. Ships were ordered to leave the Mina Al Fahal oil terminal as a precautionary measure, though loadings have since resumed according to the Gulf Mercantile Exchange. Iraqi oil terminals, however, have ceased operations entirely according to the director of the General Company for Ports of Iraq.
Precautionary measures are more than just that. Drones struck fuel tanks at Oman’s Salalah Port, leading to suspension of operations at its container and general cargo terminals (the port of Duqm remains operational). Also damaged was the Emirati port of Fujairah. Loadings are still continuing at Fujairah, but some shipowners are avoiding the port.
All of this creates an acute pricing arbitrage. Oman’s benchmark spiked at $132 on Thursday, nearly $40 above the global Brent benchmark. Ebrahim Zolfaqari, spokesperson for Iran’s military command, warned: “Get ready for oil to be $200 a barrel.”
Iran remains focused on using the Strait as leverage. The IRGC issued a statement earlier in the week offering Hormuz passage rights to any Arab or European country that expels U.S. and Israeli ambassadors-an offer no Gulf state will accept; the Saudis have publicly dismissed it, calling Iran the inevitable “loser.”
Instead, the effective closure of Hormuz to non-Iranian aligned interests has prompted alternatives, especially existing pipelines. Saudi Arabia is increasing capacity of its 746-mile East-West pipeline, likely to hit seven million barrels per day imminently. Roughly two million of those barrels are dedicated to Saudi domestic refiners, leaving five million barrels per day available for export via Yanbu and onto the Red Sea.
The Saudi pipeline, however, has never sustained full capacity for an extended period, and it does not address the full shortfall: Aramco’s daily shipping of 800,000 barrels through the Strait and the oil stranded in Kuwait, Iraq, and Bahrain.
In anticipation of the increased output, the Saudis are gathering vessels in the Red Sea. Around 12% of global seaborne oil passes through the Bab el-Mandeb Strait at the southern tip of the Arabian Peninsula, making it the world’s fourth-largest shipping chokepoint. The Strait controls traffic for Red Sea vessels accessing the Suez Canal.
This strategy is not without its own risks. According to The Wall Street Journal, Iran’s semi-official Fars News Agency said Thursday that the Iranian-backed Houthis in Yemen and other proxies in the region may begin targeting alternative oil shipping routes, including the Bab el-Mandeb Strait and the pipelines themselves.
Oil Shock
The scale of the supply disruption is coming into sharper focus. Global crude consumption runs slightly above 100 million barrels per day. Gulf producers have been forced to cut roughly six percent of that volume so far. Analytics firm Sparta Commodities estimates roughly 10 million barrels per day remain stuck in the Persian Gulf, meaning the pipeline workarounds only solve “half of the problem.”
The disruption is partially offset by a counterintuitive dynamic: Iran is moving its own oil to market at a faster pace than before the war. In a March 12 interview with SkyNews’ Wilfred Frost, Treasury Secretary Scott Bessent confirmed that both Chinese and Iranian flagged vessels are passing through Hormuz. Iran is also re-routing crude via pipeline to the port of Jask on the Gulf of Oman. A supertanker carrying approximately 2 million barrels loaded at Jask last weekend-only the third cargo to depart from the port since 2021, per Kpler.
As with Russian crude, the Administration is treating Iranian supply carefully given the price pressure environment. The U.S. has warned Israel against striking Iranian energy infrastructure, requiring the IDF to seek U.S. approval before any further such attacks according to Axios reporting.
The policy response to supply has been aggressive from Western-aligned governments. The IEA confirmed Wednesday a coordinated 400-million-barrel release from member-state strategic reserves-the largest in the agency’s history, surpassing the 182 million barrels released after Russia’s 2022 invasion of Ukraine. The announcement came after G7 energy ministers issued a statement Wednesday saying they “support the implementation of proactive measures to address the situation, including the use of strategic reserves.”
The release helped arrest a sharp early-week price spike: Brent peaked near $120 per barrel Monday before pulling back and finishing at $103 (WTI is about $5 below Brent). The one durable stabilizer remains absent, however: secure passage through Hormuz. Secretary Bessent confirmed on Thursday that the U.S. does not believe the Strait has been mined as evidenced by Chinese and Iranian vessel passage this week. Regardless, shipping remains at a standstill.
On Thursday, both Bessent and Energy Secretary Chris Wright affirmed that the U.S. Navy will begin escorting ships “as soon as it is militarily possible” and likely with the assistance of coalition partners. On Saturday, President Trump placed the burden of Hormuz security squarely on affected nations, calling on China, France, Japan, South Korea, the UK, and others to send warships to keep the Strait open. He made clear the U.S. would assist but that the countries receiving oil through Hormuz must take responsibility for protecting that passage.
The Administration continues to consider various domestic price and production relief measures, including a suspension of the Jones Act and invoking the Defense Production Act (DPA) to resume California offshore production. The latter was foreshadowed by a Department of Justice (DOJ) legal opinion last week asserting that invoking the DPA would override state-level permitting barriers and a federal consent decree. The state of California has already threatened suit. Meanwhile, the US International Development Finance Corporation (DFC) has said it is deploying maritime reinsurance “on a rolling basis,” though it’s unclear whether any tankers have yet transited the Strait with that support.
Economic Outlook
Wednesday’s Consumer Price Index (CPI) came in largely benign. Headline CPI rose a seasonally adjusted 0.3% for the month, placing the 12-month rate at 2.4%. Core CPI-stripping out food and energy-posted a 0.2% monthly gain and a 2.5% annual rate, both in line with Wall Street forecasts. Rent rose just 0.1%, the smallest monthly increase since January 2021, offering the Federal Reserve meaningful shelter-disinflation data.
Friday’s Personal Consumption Expenditures index (PCE), the Fed’s preferred metric, showed economic growth slower than first reported in the fourth quarter and January inflation at a 2.8% annual rate. Core inflation was up 3.1%. Revisions to fourth-quarter GDP pushed economic growth below its original estimate of 1.4%. The new figure came in at 0.7% for the end of 2025, no doubt influenced by the protracted federal government shutdown in Q4.
On balance, the February reports give Federal Reserve Chairman Jay Powell room to hold rates without triggering alarm heading this week’s Federal Open Market Committee (FOMC) meetings. Despite President Trump’s insistence upon rate cuts, Powell is likely to point to the war’s uncertainty as the key calculus for the Fed to maintain rates (i.e., the likelihood of the oil shock’s pass-through to March and April data).
Conventional Wall Street opinion suggests doom and gloom for equities. JPMorgan’s trading desk broadly advising clients on Thursday to go long oil and short all other U.S. equities. But the “sell America” narrative that dominated investor commentary for much of the past year is reversing.
Writing Wednesday, Bloomberg columnist Jonathan Levin argued that the war has confirmed the fallacy of the thesis: the dollar posted its strongest weekly gain in months and U.S. equities recorded their largest outperformance against the rest of the developed world since May 2025. Treasuries-while volatile-have kept pace with global peers, undermining the argument that U.S. sovereign debt has become less attractive.
Cheap natural gas is emerging as a key U.S. advantage. Since 2023, the U.S. exports more LNG annually than any other country. Given its geographic safety, the U.S. has not suffered from the same price moves as the rest of the globe. With Qatari LNG largely offline, foreign buyers are quickly looking to shift, with both Bangladesh and Taiwan exploring U.S. purchases. Even China is questioning its Middle Eastern energy reliance, a topic that will align with U.S. positioning heading into President Trump’s visit to Beijing at the end of the month.
Moreover, consumer spending is not showing signs of abatement, rising two percent in Q4. It is possible that tax refunds during the current filing season will help maintain spending levels despite the war. Treasury reports that returns are, on average, up $3,700 per filer as a result of the One Big Beautiful Bill Act (OBBBA). And while the media narrative continues to blame trade uncertainty for economic weakness, the Supreme Court’s IEEPA ruling has resulted in Section 301 investigations this week that provide more long-term durability to the tariff outlook. An important caveat to this optimistic news is the ongoing shutdown of the Department of Homeland Security, which could eat into consumer spending and growth if travel disruptions spike.
Emerging markets (EM) are absorbing the shock unevenly. India’s rupee is particularly under pressure, forcing the Reserve Bank of India to intervene last week. On an inflation-adjusted basis, the currency is at its weakest in more than a decade, having suffered its sharpest selloff since 2013. India’s exposure is compounded by its role as a top importer of Gulf crude and the uncertainty of its trade deal with the U.S. Citing several unnamed Indian officials, Reuters is reporting that India will delay signing a U.S. Agreement as a result of the latest round of Section 301 investigations.
India’s problems extend to domestic politics, both with respect to the war and trade. Case in point, the U.S. torpedo attack on an Iranian frigate that had just visited India, as well as blowback for signing a defense pact with Israel days before the start of the war. On the trade front, Deputy Secretary of State Christopher Landau’s comments that the U.S. won’t “make the same mistakes with India that we made with China 20 years ago” has opened the door to opposition criticism of Prime Minister Narendra Modi’s trade strategy.
Meanwhile, the front row seat to Iranian counter-attacks threatens the Middle East’s economic build-out. The war has triggered 46,000 flight diversions across the region, hitting the Asia-Europe route especially hard and driving up ticket prices. An economy class round-trip ticket from Sydney to London has increased by more than 80% in the past two weeks. This puts Gulf carriers’ long-term growth plans in question, as well as the infrastructure buildouts and investments in those states.
Nor has the banking industry been spared. Iran extended its threats to the regional financial sector after the offices of a bank in Tehran were struck last Tuesday. Iranian officials warned they would begin targeting banks in the region doing business with the United States or Israel-a threat that, if acted upon, would materially widen the conflict’s economic footprint beyond energy markets.
Congressional Pressure
Reporting on Special Envoy Steve Witkoff’s meeting with Russian Special Envoy Kirill Dmitriev in Florida, Bloomberg implied the U.S. is coming closer to mediating an outcome with Russia, in addition to the loosening of sanctions-none of which was confirmed by the American side. The narrative appears to be gleaned from the Kremlin’s readout which said the sides discussed “promising projects that could contribute to the restoration of Russian-American relations.” Jared Kushner and White House Senior Advisor Josh Gruenbaum also took part in the talks.
This news only feeds into the growing pushback from Democrats and a few Republicans in Congress. The Administration’s decision to allow Indian purchase of Russian oil, as well as Treasury’s Thursday suspension of sanctions on Russian oil already at sea (until April 11), drew congressional pressure throughout the week. A group of Democratic senators led by Ruben Gallego is demanding Senate Banking Committee Chairman Tim Scott “immediately” convene a hearing with Secretary Bessent on the sanctions relief.
Here, the goals of squeezing the Russian economy and calming energy markets are in conflict. Russian Urals crude is no longer trading at a steep discount from the Brent benchmark. Each $10 increase in the per barrel price brings over $1.6 billion per month in additional revenue to the Russian government. As of Friday, Russia’s Urals crude benchmark had increased about $30 per barrel since the start of the war.
Separately, the Senate passed by unanimous consent (UC) a bill from Senators John Cornyn (R-TX) and Catherine Cortez Masto (D-NV) that would deny foreign tax credits to companies doing business in Russia or paying taxes to the Russian government. This comes on the heels of reports that Russian intelligence-sharing with Iran led to successful attacks on Western assets. On the House side, Representative Mike Lawler’s (R-N.Y.) bill to sanction individuals facilitating Iranian oil trade has accumulated 295 cosponsors, giving Lawler the votes to force House floor consideration this week.
Together, these actions signal Congress searching for leverage points. But the above legislative efforts should be viewed as political irritants rather than imminent congressional constraints on the Administration’s foreign policy. The Administration’s near-term priority is market stabilization, not squeezing Iranian or Russian economic interests, and the President will not act upon legislation that hinders supply.
The larger threat for the Administration is its fiscal needs. The New York Times reported that Pentagon officials told lawmakers in a closed-door briefing on Tuesday that the war had exceeded $11.3 billion in the first six days. Secretary Bessent confirmed that number on Thursday but was adamant that no amount of spend would prevent the Administration from achieving its military objectives. Notably, the estimate did not include costs associated with the operation’s buildup. And earlier estimates of the war’s costs have proven short. $5.6 billion of munitions was used in the first two days of the war, a number much larger than the burn rate previously suggested by the Center for Strategic and International Studies (CSIS) of $891.4 million/day.
Thus, a supplemental appropriations request is all but certain. Congressional demands are likely to span the gamut from sanctions reinstatement to a range of Democratic-led conditions both related and unrelated to the war. While reports have suggested a supplemental request of approximately $50 billion, the final number and timing remains unknown. Sensing the Democratic leverage strategy, House Republicans are exploring ways to route war funding through budget reconciliation-bypassing the necessarily bipartisan appropriations process. If successful, reconciliation would significantly narrow Democrats’ ability to attach conditions.
Public opinion heading into the funding debate will matter. To be sure, Republican unity remains firm. Trump’s topline approval rating within the Party stands at 86 percent, decidedly better compared to that of his predecessors, Barack Obama and George W. Bush, who both hovered around 77 percent within their respective parties at this point in their presidencies (CNN).
On the question of the war, a McLaughlin & Associates poll conducted March 2-9 shows 51 percent approval among likely voters and 41 percent disapproval. This is an outlier from the consistent media narrative that Americans are opposed to the war and thus bears watching. But even McLaughlin’s numbers show weakness with Independents. Likely independent voters disapprove of the war 40-47 in the same poll. That said, the Republican base shows no signs of fracture. Various other public opinion polls demonstrate 77 percent GOP support for the war, with self-identified MAGA Republicans pushing 90 percent (CNN, ABC, YouGov, Vandenberg/TargetPoint).
OUTLOOK/ANALYSIS
Paris meetings today and tomorrow between Bessent, Greer, and He Lifeng are the most consequential near-term inflection point. China enters the talks with GDP targets at a generational low and its exports squeezed by the same shipping shock hitting the rest of the globe. That is leverage the U.S. side will surely bring to the table, particularly when pitching U.S. oil exports.
Meanwhile, the delayed Taiwan arms sale and the internal pushback on AI chip restrictions point towards the Administration seeking a deal in Paris and a functional Beijing summit. As Greer told CNBC heading into the weekend, the U.S. aims for “continued stability” with China, including access to rare earths and Chinese purchasing commitments.
These U.S. asks, and the distraction of the Iran war, provide President Xi with his own leverage. The U.S. has transferred military assets from the Indo-Pacific to the Middle East and delayed fulfilling military hardware orders, an opening for Xi to hasten his territorial buildup aims. The CCP will be pushing for more concrete access to advanced semiconductors and equipment, the removal of trade restrictions on Chinese companies, and reduced public support for a self-ruled Taiwan, according to Wu Xinbo, director at Fudan University’s Center for American Studies and a former Foreign Ministry advisor.
The Section 301 investigations are the long-term inflection point. A durable tariff architecture to replace IEEPA is the goal, presumably by mid-summer.
Finally, Congress is itching to come off the sidelines as Democrats are searching for leverage-from ICE restrictions to Russian sanctions and tariff refunds. As the minority party, Democrats have few tools at their disposal but will finally get their moment when the Administration submits a supplemental spending request.
The core geopolitical variable this week is the same as last, though more prescient as each day passes: how long does the war last? President Trump’s public signals are almost certainly aimed at markets rather than a clear indication of the war’s duration. The gap between what the President is saying publicly and what Iran is signaling has widened this week, a potential harbinger of a longer drawn-out conflict.
Market risk-for now-remains isolated to the energy sector. The IEA’s reserve release stabilized pricing this week but its effect is finite and the market is still pricing for a shorter war. The pipeline workarounds are more durable, absent Houthi attacks, but only solve for half the stranded-barrel problem. Meaning, energy calming measures buy weeks, not months.
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