Economic ramifications of Iran war puts pressure on Trump

One of the most powerful aides in Washington used to wake up most mornings at the ungodly hour of 3.30am.

Back in 2022, Ron Klain's early start was not to check intelligence briefings, news alerts, messages or even feed a newborn baby.

Then president Joe Biden’s chief of staff was on his phone analysing publicly available gas price trackers.

Mr Klain understood how that number shaped voters’ perception of the economy as such figures were displayed in bright lights on many street corners across the country.

The Biden administration’s obsession with gas prices was outlined in a Washington Post piece four years ago and noted how White House economic officials watched for months as the president’s approval rating moved with the average price.

Four years later, Donald Trump is back in the White House and the same economic barometer is now threatening his administration.

Just over a fortnight ago, the current US president touted falling gas prices during his annual State of the Union address.

This week, Americans were paying on average $3.60 (€3.15) per gallon at the pump - that was up 23% compared to the previous month.

President Trump’s approval rating also hit a new low this week on two major issues: the economy and immigration.

The latest NPR/PBS poll showed that a total of 35% of respondents said they approved of the way in which Mr Trump was handling the economy, with 58% disapproving and 7% saying they were not sure.

This is the weakest economic approval rating yet recorded for the president, who ran on putting more money in people’s pockets.

With gas prices continuing to climb, it may be Republicans, not Democrats, losing sleep over the numbers as it jeopardises their sales pitch ahead of November’s elections.

The US president said the rising cost was "temporary" and a small price to pay following his administration's military operation against Iran, dubbed Operation Epic Fury.

For Republicans in Congress, the spike is eating away at gains some Americans have seen from sweeping tax cuts enacted by the GOP dominated Congress last year.

Senate Majority Leader John Thune, a Republican, said it is "something obviously we’ve got to pay attention to".

But this is an issue effectively of the party’s own making as it backed the president’s ambitions in the Middle East.

The question is how much political pressure will rising gas prices put on Republicans and if they will act on it.

While Mr Trump said he knew this would happen following the operation's launch, his administration has faced accusations that it was not fully prepared for the fallout.

A resilient Iran has rattled the global economy by making the Strait of Hormuz, a critical passage for energy supplies, too dangerous to pass through.

Senior Fellow at Brookings Institution Tom Wright told RTÉ News Operation Epic Fury has not gone how Mr Trump planned it.

Mr Wright, who was also a former member of Mr Biden’s national security team, said: "I think initially he hoped that it would be like Venezuela, that he would get rid of the supreme leader.

"But then do a deal with whoever was number two, three or four.

"They didn't need, from his perspective, to be a Democrat or to be benign to the Iranian people.

"They just needed to work with him on the nuclear programme, to restrict it maybe cut him in on the oil.

"It hasn't turned out like that."

Mr Wright said Mr Khamenei’s son is now the supreme leader and war has continued for 12 days.

"It's expanded into the Strait of Hormuz, inflicted serious damage on the Gulf and I think he really is in a bind now about how to end this," he added.

The unclear timeline of this conflict piles another level of uncertainty on the economy.

According to some analysts, if Operation Epic Fury is not ended soon, it could turn into a long, messy drawn out war with economic problems set to continue and possibly worsen.

Lieutenant Colonel Daniel L Davis, who is now retired, warned that Iran’s leverage could turn into a repeat of the Vietnam War.

He said: "We had enormous support or advantages over the north Vietnamese.

"We just practically bombed them into the Stone Age and yet they never capitulated.

"What we did for 20 long, painful years in Afghanistan, which I had two combat deployments and saw up close and personal, we did the same thing."

Mr Davis said "on the ground, Iran remains viable" despite Mr Trump, Secretary of Defence Pete Hegseth and the chair of the Joint Chiefs of State listing "all these things we've destroyed and all these percentages that allegedly they're reduced".

The numbers and percentages, he said, "don't even matter".

He added: "The only thing that matters is can you compel compliance or can you not? And we are in the not category right now."

Mr Trump has said this military operation will end soon.

In the meantime, Team Trump has been weighing measures to stabilise markets.

In an interview with Sky News, US Treasury Secretary Scott Bessent revealed the US is easing sanctions on Russian oil.

He played down the financial benefits for Moscow by stating the measures were "narrowly tailored" and short term".

According to the Financial Times, Russia has been pocketing as much as $150 million a day in extra oil revenues because of this crisis.

Volatility in the financial markets has previously shaped the president’s decision-making.

Last year, in a reminder of how closely the White House watches the economic signals, sharp swings prompted the Trump administration to soften parts of its tariff policy.

Somewhere in Washington, a high level administration official is likely watching the same gas price website that pulled Mr Klain out of bed in the wee hours all those years ago.

But how much will those prices climb before consumer and political pressure forces the administration to do something about it?