The Fed Waits Out the Tariff Economy Powell’s balancing act: projecting confidence while admitting ‘we don’t know’ what comes next
(…) “We haven’t been through a situation like this, and I think we have to be humble about our ability to forecast it,” Powell said. (…)
The timing for rate cuts “could come quickly. It could not come quickly,” Powell said. “We feel like we’re going to learn a great deal more over the summer on tariffs.” (…)
Rate projections released Wednesday revealed a widening divergence among the 19 policymakers who gather roughly every six weeks to set rates. While 10 of them—a narrow majority—penciled in at least two rate cuts this year, the cohort of officials who think the Fed won’t cut at all this year saw its ranks rise, to seven from four in March.
Powell played down potential internal disagreements. “You can make a case for any of the rate paths that you see” in the latest projections, he said.
The divide suggests more officials won’t consider cuts without clear economic weakness. Fed officials don’t feel as if they can pre-empt any slowdown because that could make inflation worse, particularly after four years with inflation running above the central bank’s 2% target. (…)
Powell spent much of his hourlong news conference reviewing all that the Fed doesn’t—yet—know.
Chief among those uncertainties is whether businesses will succeed in passing tariff increases along to customers or whether inflation-weary households and businesses will resist, leading to demand destruction.
“There are many parties in that chain. There’s the manufacturer, the exporter, the importer, the retailer and the consumer, and each one of those is going to be trying not to be the one to pay for the tariff,” Powell said.
But someone will have to pay, Powell said—whether it’s just one party or all of them.
- “Most Fed policy participants still anticipate at least one quarter-point interest-rate cut this year, and many foresee two. But the number who think it may be appropriate to leave rates unchanged the rest of the year has increased to seven out of 19, from four when the last projections were published in March. There’s now a greater divergence of opinion on likely rates in 2026 and 2027, with a more hawkish tone.” (WSJ)
War and Food Prices Could Heat Up Powell’s Summer Uncertainty has given the Fed reasons to pause rate cuts. Here are a couple of more.
(…) Until the Fed is really confident that tariffs haven’t triggered a significant bump in inflation, in other words, it’s going to have to stay on hold. The risk of a commodity price spike created by the Middle East conflict adds to the arguments to wait and see. To quote Standard Chartered Plc’s Steven Englander, we should “take the summer off.” Englander also suggests that Powell is implicitly arguing for fewer than two cuts this year:
Given the absence of references to softer activity, and how frequently he referred to price increases from tariffs, we think it is possible that Powell was among those who saw zero or one cut.
The Fed chair is only very rarely outvoted, so it’s significant if he is now one of the hawks. (…)
The biggest takeaway from the most recent US inflation print was that tariffs are still not showing up in any significant way. If it carries on like this for a few more months, rate cuts are likely. But there’s another risk to those likely two cuts by year-end, and it’s naggingly beyond the Fed’s control — the surge in food prices. Last month, food inflation climbed to 0.3% month-on-month, its fastest pace since 2021. The monthly advance surpassed the average pace of inflation growth in the last five months:
While tariff pressures may have something to do with this price growth, the escalation in the Middle East poses an additional upside risk that hasn’t yet shown itself in food prices. The concern is that closing the Strait of Hormuz, a possible desperation tactic by Iran to shut off the flow of oil, would also affect agricultural commodities. The passage is a major transit point for fertilizer producers in the Gulf region. Iran ranks among the largest global exporters of urea anhydrous ammonia. Other fertilizer producers like Qatar, Saudi Arabia and Oman also rely on the passage. (…)
Throw in the likely eventual impact of tariffs, and consumers would be facing the prospect of paying higher prices for food. (…)
Although Powell plays down the conflict’s risks to US energy prices, it is challenging to extend the same assurance globally. Until tensions flared up, Bloomberg Economics’ Ziad Daoud argued that the global disinflation story was looking solid even in the face of tariff uncertainty:
Tariffs have played a role: dampening demand, weakening the dollar, and lowering oil prices. But the Iran-Israel war threatens to reverse that. Crude is rising again. And if the conflict escalates further, so will consumer prices.
While the promising May inflation data, coupled with the latest Fed dot plot, suggests that US rate cuts are on the horizon, the path is far from smooth. The significant surge in food prices adds a layer of uncertainty, even if it’s short-lived. In the near term, the combination of geopolitical instability, looming tariff effects, and volatile commodity markets poses a clear and imminent danger to consumer food prices. Consequently, while disinflationary trends might persist in other sectors, food inflation presents a stubborn hurdle that could complicate the Fed’s timing.
CPI-Food-at-Home inflation was 2.3% in May (left chart), up from 1.0% one year ago and less than 0.7% pre-pandemic. On a MoM basis (right), the trend is clearly upwards, though volatile.
The Fed is mostly concerned about core inflation but most consumers are much more concerned about inflation on “essentials” (energy, food and rent), now running at 2.9% YoY vs wages at 3.9%. The narrow, positive gap could reverse quickly. So far, so good:
Auto Tariffs Seen Hiking US Car Prices by Nearly $2,000 Per Vehicle
Car buyers will bear the brunt of the $30 billion cost of President Donald Trump’s tariffs, driving up already high US auto prices by almost $2,000 per vehicle, according to consultant AlixPartners.
The firm expects auto companies to pass along 80% of the cost of Trump’s tariffs — which it calculates as $1,760 more per car. AlixPartners, as part of its annual global automotive outlook, also cautioned that the administration’s anti-electric vehicle policies risk relegating American automakers to bit players in the global EV market. (…)
General Motors Co. and Ford Motor Co. have already said they expect a $5 billion and $2.5 billion tariff impact this year, respectively, though they say they will find offsets in part through price adjustments.
Those higher prices will result in about 1 million fewer vehicles sold in the US over the next three years, Wakefield said. (…)
AlixPartners’ predicted sales hit is more muted than some other projections because the firm sees tariff rates falling as the US negotiates trade deals with other countries. It forecasts the 25% auto tariff will ultimately fall to 7.5% on assembled autos, 5% on parts and even lower on cars and parts that are compliant with the US-Mexico-Canada trade agreement. (…)
AlixPartners slashed its forecast for EV sales in the US by nearly half. It now sees battery electric vehicles making up just 17% of US auto sales in 2030, down from a previous prediction that EVs would make up 31% of sales by then.
Traditional internal combustion engine vehicles will account for half of US sales in 2030, up from AlixPartners’ previous prediction that they would only make up about one-third of sales.
The consultant sees traditional hybrids accounting for 27% of the US market in 2030, up from its prior forecast of 24%, while plug-in hybrids and extended-range electric vehicles will account for just 6% of US auto sales by then, down from a previous prediction of 10%. (…)
The “aggressive take-down of support” for EVs, will leave American automakers with the dubious distinction of being the world leader in big, gas-guzzling engines, a century-old technology that’s in decline, Wakefield said.
“They’ll have the world’s best V8 engines by 2028,” Wakefield said of American automakers. “They’ll probably also have the world’s only V8 engines by 2028.”
US Jobless Claims Stabilize Near Highest Levels This Year
Initial claims decreased by 5,000 to 245,000 in the week ended June 14, in line with the median forecast in a Bloomberg survey of economists. Continuing claims, a proxy for the number of people receiving benefits, also fell slightly, to 1.95 million, in the previous week, according to Labor Department data released Wednesday.
The four-week moving average of new applications, a metric that helps smooth out volatility, rose to 245,500, the highest since August 2023.
Data tend to be volatile, especially around holidays or when schools are on summer vacation. Overall, jobless claims have risen in the past two months, reflecting a gradual slowdown in the labor market.
The housing market slump is getting worse
(…) Housing starts fell almost 10% last month to an annualized pace of 1.3 million, well below the rate that economists expected, the Commerce Department said Wednesday morning. Building permits also came in worse than expected, particularly for single-family homes. They dropped to an annualized rate of 898,000, nearly 3% below April.
The National Association of Home Builders said sentiment among builders has only been lower than its June level twice since 2012. “Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,” said Buddy Hughes, a North Carolina-based developer who chairs the NAHB, said in a statement Tuesday.
Softer demand is being met by higher building costs, including for labor and materials. The industry is heavily reliant on immigrant workers, who are being targeted for deportations by the Trump administration.
Meanwhile, tariffs on steel and aluminum have doubled to 50%, except for U.K. imports of the materials. The Trump administration is considering higher tariffs on wood materials, including lumber.“New construction has slowed as builders have pulled back on production,” Lennar co-CEO Stuart Miller said on an earnings call Tuesday. Miller said “labor and material costs — lumber is a particular headache — are generally increasing.”
CEO sentiment at five-year low (Axios)
Economic sentiment among America’s top CEOs plunged to the lowest level since 2020, according to a new survey by the Business Roundtable, first seen by Axios. Chief executives have not been this sour on the economy since the once-in-a-century pandemic, with significant downgrading expectations for hiring, investment and sales growth.
- The Business Roundtable’s CEO Economic Outlook Index fell by 15 points in the second quarter to 69, a drop that brings the index well below its historical average of 83.
- The previous survey was conducted in March before President Trump’s “Liberation Day” announcing large-scale tariffs. Since then, the trade war has been de-escalated and the stock market recovered, yet CEOs still feel worse about the economy.
Data: Business Roundtable; Chart: Axios Visuals
The index is above the level that suggests an economic recession is underway. But the survey is troubling for what it signals about the labor market that has so far been resilient, helping buffer the broader economy. For months, it’s been a “no hire, no fire” labor market with sluggish hiring rates and low layoffs.
Business Roundtable’s survey shows risks that this period might be coming to an end.
- The employment subindex plummeted for the second straight quarter — this time, by almost 19 points, with more than 40% of CEOs expecting to shrink their workforces in the next six months.
- That is up from the roughly 30% who envisioned cutting payrolls in Q1. This time last year, just over 20% planned to decrease employment.
- It’s difficult to know how much of that slump is related to softer economic projections as opposed to, say, AI-related workforce adjustments.
A subindex for capital expenditures — investment in new buildings, equipment, technology and more — fell roughly 15 points, with fewer executives planning to increase spending.
- That came alongside a more than 10-point drop in sales expectations, with a smaller cohort of CEOs expecting higher revenues.
“Driving this quarter’s decline in the Index is broad-based uncertainty, arising substantially from an unpredictable trade policy environment,” Joshua Bolten, the Business Roundtable’s CEO, said in a release seen by Axios.
- “Extending and enhancing tax reform is critical, but it is not sufficient. American businesses also need the Administration rapidly to secure deals with our trading partners that open markets, remove harmful tariffs and provide certainty for investment,” Bolten said.
- The group surveyed 169 of its members in the first two weeks of June, when the U.S.-China trade truce was at risk of breaking down before top Trump officials met with their Chinese counterparts.
“The quarter’s survey results signal that Business Roundtable CEOs are approaching the next six months with caution,” Cisco CEO Chuck Robbins, who chairs the group, said in a release.
Business Inflation Expectations Remain Unchanged at 2.4 Percent
Firms’ inflation expectations for the coming year remained relatively unchanged at 2.4 percent. Sales levels and profit margins compared to “normal times” increased, according to the Atlanta Fed’s latest Business Inflation Expectations survey.
China’s EV Powerhouse BYD Accelerates Into Europe’s Heartland
(…) BYD had arrived with an EV for the masses, a market segment its European peers have struggled to lock down. The Dolphin Surf aims to be a Fiat 500 or VW Beetle for the electric age — fun, accessible and built to put millions of drivers behind the wheel, only this time with a battery. (…)
After a slow start, BYD is gaining sales momentum with sleek showrooms, bold pricing, and a dealer push that’s begun to rattle entrenched rivals. China’s biggest carmaker has overtaken Tesla Inc. in European EV sales, expanded its hybrid lineup to adapt to consumer tastes, and is hiring aggressively as it builds a factory in Hungary and poaches executive talent from the region’s top carmakers. (…)
BYD sees a rare opening as the EV shift disrupts loyalties and cracks open a €500 billion ($576 billion) market where the average EV still sells for twice what it would in China.
“If you’re winning here, it means you’re super good in every angle,” said Stella Li, BYD’s executive vice president and the face of the carmaker outside China. In an interview, she pledged to spend up to $20 billion in the region. “Europe is our most important market.” (…)
“Their lineup is growing every day with very, very competitive products.” (…)
“We want to bring the technology here, build a very strong after-sales service here, and then work with local partners to really merge us into part of a society, community here,” Li said. (…)
The company has had its biggest success in the UK. After selling just 1,611 cars through April 2024, BYD blitzed the market, signing up dealers and adding plug-in hybrid models to its repertoire. For the same period in 2025, sales had jumped to nearly 12,000 vehicles, according to Dataforce. At that pace, BYD is on track to leapfrog Fiat, Honda Motor Co. and BMW AG’s Mini — brands long entrenched in British driveways.
(…) Though he typically prefers a European brand, it was £6,000 ($8,070) cheaper than an Audi A3 hybrid, he said, had more space and overall range and arrived from China in just two months.
“The clincher is that the Seal U offers all the add-ons — cruise control, 360 camera, head-up display — that other manufacturers would usually nickel and dime you for,” Dalgliesh said by phone. “So it ends up being just a choice of engine size and battery.” (…)
BYD’s ability to move quickly is backed by one of the world’s largest R&D operations, with a 120,000-strong team as of last year. As it prepares to begin shipping the Seal U from its Hungarian plant later this year, the company is also working to localize its formidable supply chain. Controlling everything from battery cells to shipping and importing, BYD is cutting out middlemen to deliver faster and expand its physical footprint across Europe. (…)
Still, BYD’s factory in Hungary’s southern city of Szeged underscores the scale of its ambition. It will produce EVs and hybrids for the EU market and tap into China’s Belt and Road logistics project, via the modernized rail link from the Greek port of Piraeus — owned by Cosco Shipping Holdings Co. — to Central Europe.
The factory will help reassure dealers the company is in Europe for the long haul and that customers will be able to get their vehicles serviced reliably.
“If we decide to do something, we put all our resources behind it,” Li told Bloomberg this month.
For all the Chinese government’s efforts to prevent price cuts by market leader BYD Co. from turning into a vicious spiral, analysts say a combination of weaker demand and extreme overcapacity will slice into profits at the strongest brands and force feebler competitors to fold. Even after the number of EV makers started shrinking for the first time last year, the industry is still using less than half its production capacity.
Chinese authorities are trying to minimize the fallout, chiding the sector for “rat race competition” and summoning heads of major brands to Beijing last week. Yet previous attempts to intervene have had little success. For the short term at least, investors are betting few automakers will escape unscathed: BYD, arguably the biggest winner from industry consolidation, has lost $21.5 billion in market value since its shares peaked in late May.
“What you’re seeing in China is disturbing, because there’s a lack of demand and extreme price cutting,” said John Murphy, a senior automotive analyst at Bank of America Corp. Eventually there will be “massive consolidation” to soak up the excess capacity, Murphy said. (…)
Auto CEOs were told last week they must “self-regulate” and shouldn’t sell cars below cost or offer unreasonable price cuts, according to people familiar with the matter. The issue of zero-mileage cars also came up — where vehicles with no distance on their odometers are sold by dealers into the second-hand market, seen widely as a way for automakers to artificially inflate sales and clear inventory.
Chinese automakers have been discounting a lot more aggressively than their foreign counterparts. (…)
The pricing turmoil is also unfolding against a backdrop of significant overcapacity. The average production utilization rate in China’s automotive industry was mere 49.5% in 2024, data compiled by Shanghai-based Gasgoo Automotive Research Institute show.
An April report by AlixPartners meanwhile highlights the intense competition that’s starting to emerge among new energy vehicle makers, or companies that produce pure battery cars and plug-in hybrids. In 2024, the market saw its first ever consolidation among NEV-dedicated brands, with 16 exiting and 13 launching. (…)
Trump Privately Approved of Attack Plans for Iran but Has Withheld Final Order
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MAGA Brawls Over Prospect of Trump Joining Strikes on Iran The White House has quietly reached out to MAGA influencers to quell any backlash
(…) Some of the sharpest objections over Iran have come from avid Trump allies such as Republican Rep. Marjorie Taylor Greene of Georgia. “Anyone slobbering for the U.S. to become fully involved in the Israel/Iran war is not America First/MAGA,” she wrote on X. Appearing on former Republican Rep. Matt Gaetz’s television show, Greene said, “A Middle Eastern war will pull America back 20 years.” (…)
Trump is under pressure to launch U.S. strikes on Iran from allies such as Sen. Lindsey Graham (R., S.C.) and Fox News host Mark Levin, who said on his show this week, “This is good vs. evil. You’re either a patriotic American who’s going to get behind the president of the United States, the commander in chief, or you’re not.” (…)
Trump conceded Wednesday that opinions on U.S. involvement in Iran are mixed, but insisted, “My supporters are more in love with me today than they were even at the election.” (…)
US spies said Iran wasn’t building a nuclear weapon. Trump dismisses that assessment
Tulsi Gabbard left no doubt when she testified to Congress about Iran’s nuclear program earlier this year.
The country was not building a nuclear weapon, the national intelligence director told lawmakers, and its supreme leader had not reauthorized the dormant program even though it had enriched uranium to higher levels.
But President Donald Trump dismissed the assessment of U.S. spy agencies during an overnight flight back to Washington as he cut short his trip to the Group of Seven summit to focus on the escalating conflict between Israel and Iran.
“I don’t care what she said,” Trump told reporters. In his view, Iran was “very close” to having a nuclear bomb.
Trump’s statement aligned him more closely with Israeli Prime Minister Benjamin Netanyahu, who has described a nuclear-armed Iran as an imminent threat, than with his own top intelligence adviser. (…)
Gabbard blamed the media for misconstruing her earlier testimony, asserting that “President Trump was saying the same thing that I said.” (…)
In her March testimony to lawmakers, Gabbard said the intelligence community “continues to assess that Iran is not building a nuclear weapon and Supreme Leader Khamenei has not authorized the nuclear weapons program he suspended in 2003.”
She also said the U.S. was closely monitoring Iran’s nuclear program, noting that the country’s “enriched uranium stockpile is at its highest levels and is unprecedented for a state without nuclear weapons.”
Gen. Erik Kurilla, who leads U.S. forces in the Middle East, recently testified to Congress that Iran could produce enough nuclear material for 10 weapons in three weeks. However, he did not say how long it would take to assemble the pieces into a bomb.
A senior intelligence official said Trump was right to be concerned because its uranium enrichment far exceeds what would be needed for domestic purposes. Another senior administration official said Iran was as close to having a nuclear weapon as it could be without having one. (…)
Sen. Mark Warner of Virginia, who is the top Democrat on the Senate Intelligence Committee but isn’t on the budget panel, said he’s unaware of any new information that would change the assessment of Iran’s nuclear capabilities.
“Director Gabbard stated publicly in March that the Iranians were not actively pursuing a bomb,” Warner said. “I’ve seen nothing in recent intelligence that contradicts what Director Gabbard said.”
The head of the International Atomic Energy Agency [the UN’s nuclear watchdog] has repeatedly warned that Iran has enough enriched uranium to make several nuclear bombs if it wants to. Iran maintains its nuclear program is peaceful.
An earlier intelligence report, compiled in November under then-President Joe Biden, a Democrat, also said Iran “is not building a nuclear weapon.”
However, it said the country has “undertaken activities that better position it to produce one, if it so chooses,” such as increasing stockpiles of enriched uranium and operating more advanced centrifuges. The report did not include any estimates for a timeline for how quickly a bomb could be built. (…)
The Institute for Science and International Security (ISIS), a nonprofit, non-governmental, and non-partisan organization based in Washington, D.C., seeks to inform the public and policymakers about science and policy issues affecting international security, with a strong focus on nuclear weapons proliferation and related technologies. The organization works to stop the spread of nuclear weapons, increase transparency of nuclear activities worldwide, strengthen the international non-proliferation regime, and promote deep reductions in nuclear arsenals.
On June 9, 2025, ISIS wrote:
- Iran can convert its current stock of 60 percent enriched uranium into 233 kg of WGU in three weeks at the Fordow Fuel Enrichment Plant (FFEP), enough for 9 nuclear weapons, taken as 25 kg of weapon-grade uranium (WGU) per weapon.
- Iran could produce its first quantity of 25 kg of WGU in Fordow in as little as two to three days.
- Breaking out in both Fordow and the Natanz Fuel Enrichment Plant (FEP), the two facilities together could produce enough WGU for 11 nuclear weapons in the first month, enough for 15 nuclear weapons by the end of the second month, 19 by the end of the third month, 21 by the end of the fourth month, and 22 by the end of the fifth month.
- In front of the inspectors’ eyes, Iran is undertaking the near-final step of breaking out, now converting its 20 percent stock of enriched uranium into 60 percent enriched uranium at a greatly expanded rate, although this rate cannot be sustained much longer (see below).
- Iran has no civilian use or justification for its production of 60 percent enriched uranium, particularly at the level of hundreds of kilograms. Its rush to make much more, quickly depleting its stock of near 20 percent enriched uranium, which has a civilian use in research reactors, raises more questions. Even if one believed the production of 60 percent is to create bargaining leverage in a nuclear negotiation, Iran has gone way beyond what would be needed. One has to conclude that Iran’s real intent is to be prepared to produce large quantities of WGU as quickly as possible, in as few centrifuges as possible. (…)
- The IAEA also previously reported the implementation of a “strengthened safeguards approach […] at a nuclear material storage at Esfahan”, an important development given that a large amount of Iran’s 60 percent HEU and 20 percent enriched uranium stock have previously been reported to be stored at Esfahan. Exactly how much of Iran’s enriched uranium stocks are held at Esfahan, however, compared to other locations, is no longer reported.
- The IAEA’s efforts to verify Iran’s nuclear activities, particularly its uranium enrichment activities, continue to be seriously affected by Iran’s decision last fall to withdraw the designation of several experienced inspectors. The IAEA repeatedly requested that Iran reconsider this inappropriate, political act, including in a June 2024 Board of Governors censure resolution, but Iran has not done so. The IAEA stated in its accompanying report, NPT Safeguards Agreement with the Islamic Republic of Iran: “The withdrawal of the designation of several experienced inspectors was also not in line with the required spirit of cooperation.” (…)
- In general, Iran has not prioritized stockpiling uranium enriched between 2 to 5 percent. This choice is at odds with Iran’s contention that its primary goal is to accumulate 4 to 5 percent enriched uranium for use in nuclear power reactor fuel. Instead, Iran has focused on producing 60 percent enriched uranium, far beyond Iran’s civilian needs. (…)
- Iran stopped implementing the Additional Protocol (AP) to its comprehensive safeguards agreement (CSA) and the JCPOA’s additional monitoring arrangements on February 23, 2021. Iran’s actions and its refusal to cooperate with the IAEA across a wide range of monitoring issues causes the IAEA to consistently express doubt about understanding key aspects of Iran’s nuclear activities. Without the AP in place, the IAEA has neither been able to conduct complementary access to any sites and other locations in Iran nor received updated declarations from Iran. (…)
- The IAEA concludes that “Iran’s decision to remove all of the Agency’s equipment previously installed in Iran for JCPOA-related surveillance and monitoring activities has also had detrimental implications for the Agency’s ability to provide assurance of the peaceful nature of Iran’s nuclear programme.” (…)
- Combined with Iran’s refusal to resolve outstanding safeguards violations and the program’s unresolved nuclear weapons dimensions, the IAEA has a significantly reduced ability to monitor Iran’s complex and growing nuclear program. The IAEA’s ability to detect diversion of nuclear materials, equipment, and other capabilities to undeclared facilities remains greatly diminished.
The Federation of American Scientists (FAS) takes a nuanced and technically grounded stance on Iran’s nuclear program. FAS advocates for an approach that is both optimistic and vigilant: it proposes that the West should “trust but verify” Iran’s claim that its nuclear program is purely for peaceful purposes. FAS views recent interim agreements that temporarily halt some of Iran’s nuclear activities and increase openness to IAEA inspections as encouraging, but it also warns that these measures are reversible and depend on the progress of further negotiations.
I asked Perplexity.ai: why is Iran refusing total assessment of its nuclear program?
Iran is refusing a total assessment of its nuclear program primarily due to a combination of political, strategic, and security concerns:
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Allegations of Politicization and Sovereignty: Iranian leaders have repeatedly refuted allegations of nuclear weapons development, characterizing international resolutions and demands for broader inspections as “political” rather than technical. They argue that such demands infringe on Iran’s sovereign rights and are motivated by external political pressures rather than genuine nonproliferation concerns.
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Retaliation for International Pressure and Attacks: Iran’s cooperation with the International Atomic Energy Agency (IAEA) has diminished in response to actions by the U.S. and its allies, such as the reimposition of sanctions, military threats, and, most recently, Israeli airstrikes on nuclear facilities. Iranian officials have announced measures to safeguard nuclear materials and equipment that will not be reported to the IAEA, explicitly ending previous levels of transparency. Lawmakers are even considering withdrawal from the Nuclear Non-Proliferation Treaty (NPT), mirroring North Korea’s precedent.
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Security and Secrecy: Iran claims that increased transparency could expose its nuclear infrastructure to sabotage or attack, as demonstrated by recent Israeli strikes. This has led Iran to restrict inspector access and withhold information about certain sites, citing national security concerns.
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Disputes Over Legal Obligations: While Iran is a signatory to the NPT, it has not ratified the Additional Protocol, which would allow inspectors broader access to suspected sites. The IAEA and Western nations argue that Iran is breaching its nonproliferation commitments, but Iran maintains it is within its rights under the current agreements and that demands for expanded inspections go beyond its legal obligations.
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Negotiation Leverage: By limiting access and cooperation, Iran may be seeking to strengthen its bargaining position in ongoing or future negotiations with the U.S. and European powers over sanctions relief and recognition of its right to peaceful nuclear technology.
Today’s WSJ Editorial Board:
The Fordow Imperative—for Trump and Israel
(…) Central to an Israeli strategic victory will be whether it can destroy Iran’s main nuclear-weapons sites, and that effort deserves American help.
Israel’s bombing is first and foremost an anti-nuclear-proliferation campaign. Other goals include attriting Tehran’s ballistic-missile capacity, which the regime had been escalating to be able to produce hundreds a month. Israel has also begun to target Iran’s domestic oil and gas supply chains after Iran’s attacks on Israeli civilian populations. (…)
The enriched uranium at Fordow is believed to be enough to produce several bombs. The danger is that if Iran retains the nuclear fuel it has already highly enriched, as well as its centrifuges to enrich more, the country could sprint to make a bomb. (…)
Mr. Trump posted on social media Sunday that “we can easily get a deal done” to end the war. But that prospect will be more likely if he helps Israel finish the military job. Israel is signaling that its campaign can take either a few days or many weeks. If Mr. Trump won’t help on Fordow, Israel will need more time to achieve its strategic goals. A neutral U.S. means a longer war.
The President is no doubt concerned that Iran or its proxies will hit U.S. troops or bases in the Middle East. But it isn’t clear how much damage Iran could do given how much Israel has degraded Iran’s forces. Iran also knows that attacking U.S. forces would mean a far more devastating U.S. response. The U.S. could destroy Iran’s navy, oil and gas production facilities and export terminals. (…)
Mr. Trump told a writer for the Atlantic: “For those people who say they want peace—you can’t have peace if Iran has a nuclear weapon. So for all of those wonderful people who don’t want to do anything about Iran having a nuclear weapon—that’s not peace.”
He also said yesterday: “I may do it, I may not do it. I mean, nobody knows what I’m going to do.”
Speaking of “knowing”:
“How many people live in Iran, by the way?” Mr. Carlson, the former Fox News host and a longtime ally of President Trump, asked Mr. Cruz, who has become a stalwart supporter of the president’s evolving approach to the conflict between Iran and Israel.
“I don’t know the population,” Mr. Cruz said.
Then Mr. Carlson went in for the kill: “You don’t know the population of the country you seek to topple?”
BTW: its 90 million. Iraq in 2003: 27M. Afghanistan in 2001: 20M. Ukraine in 2020: 45M.
To strike or not is one decision. What to do the day after is another one.