For whom Iran tolls
Iran, Saudi Arabia, Japan, India, and the US.
**An earlier version of this email was sent without the final dispatch - apologies.**
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IRAN. As the quagmire deepens, a pattern emerges.
SAUDI ARABIA. Trump tries belatedly to stretch a deal.
JAPAN. Tokyo debates the risks of nuclear fallout.
INDIA. Modi tries to avert another South Asian Gen-Z revolt.
UNITED STATES. More tariffs on the road to serfdom.
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IRAN. It tolls for Xi
As the quagmire deepens, a pattern emerges.
Brent futures hit $100 a barrel as Donald Trump vowed “major military punishment” and more US assets entered the region. CENTCOM said it had finished a 13th consecutive night of strikes. The S&P 500 suffered its worst day in a month.
INTELLIGENCE. Oil has since eased as markets pre-empt the now-established pattern of a Sunday night TACO. The US has signalled restraint by blowing up empty boats in lieu of other targets. Trump even described the Houthis as once having “acted very professionally and smart” – high praise for designated terrorists. Yet a pattern of Sino-Iranian cooperation is also emerging, with the Houthis letting two Chinese tankers through. This could define the next phase.
FOR BUSINESS. In the short term, restraint on Chinese shipping shows Iran still values a functioning global economy, and isn’t suicidal. Yet in the long term, it could signal that China has an upper hand on the US, giving Trump a new dilemma in terms of escalating or not. Active cooperation between Beijing and Tehran would make this a world war. Yet it also gives the US and Iran an offramp if China were to shoulder regional security, including on the issue of tolls.
SAUDI ARABIA. Abraham accordion
Trump tries belatedly to stretch a deal.
Trump said a nuclear deal with Riyadh, signed Wednesday, would be contingent on it joining the Abraham Accords after a day of GOP and Israeli pressure. The White House suggested Energy Secretary Chris Wright acted without authority.
INTELLIGENCE. Riyadh is unlikely to accept a contract amendment, and it’s unlikely that Trump was not briefed. Still, Trump’s attempts to squeeze out another concession show incompetence of a different kind. Riyadh recognising Israel will be politically impossible without a two-state solution, particularly as Foreign Minister Prince Faisal prepares to host a conference on the topic next week. Trump’s attempt to shift the goalposts will only help Beijing score again.
FOR BUSINESS. The deal, which lacked IAEA safeguards or enrichment restrictions, was likely less due to diplomatic ineptitude than strategic desperation, as Saudi Arabia moves toward a Pakistani (i.e. Chinese) umbrella and shows ongoing discomfort with a war neither requested nor approved. With terms now up in the air, a Chinese alternative looks even more appealing, a point that will at least have been noticed by Marco Rubio as he met Wang Yi in Manila.
JAPAN. Godzilla complex
Tokyo debates the risks of nuclear fallout.
Japan was reviewing its $40 billion nuclear deal with the US due to fears it would be held liable for a meltdown on US soil, the Financial Times said. US officials praised a framework with Japan and South Korea on small modular reactors.
INTELLIGENCE. The SMR framework, signed at this month’s NATO summit and highlighted during Rubio’s Manila visit, is, like the bilateral Japan-US deal, a sign of enduring US engagement in East Asia, yet dodgy terms, whether the fault of Tokyo and Washington, could present another win for Beijing. As shown in Obama’s Iran nuclear pact, which took 20 months to negotiate, technical deals are hard. Trump’s fast and loose approach is causing chain reactions.
FOR BUSINESS. Trump’s propensity to move fast, break things, and link security treaties to trade and investment deals may have a limited half-life, particularly as contenders for future arrangements split for other partners. Beyond China, Russia, India and France could particularly benefit as they pursue their own atomic diplomacy. Even loyal allies like Australia, which made another $4.6 billion AUKUS downpayment Thursday, may one day find the US radioactive.
INDIA. We don't need no education minister
Modi tries to avert another South Asian Gen-Z revolt.
Leaders of the Cockroach Janata Party, an unregistered youth-led movement, met with senior ministers near parliament Friday in an effort to diffuse tensions after days of protests. Activist Sonam Wangchuk ended a 26-day hunger strike.
INTELLIGENCE. The meeting, at Delhi’s posh Constitution Club, may mollify some of the cockroaches, but judging by the recent efforts of other South Asian governments to co-opt unruly youth, more work may be needed. The CJP continues to call for Narendra Modi’s education minister, Dharmendra Pradhan, to resign over his handling of a paper leak in this year’s medical entrance exam. It may seem trivial, but to young Indians struggling for jobs, it’s everything.
FOR BUSINESS. In India, NEET stands for National Eligibility Entrance Test, not the OECD acronym Not in Education Employment or Training, but it could be the same. India’s economy is booming, but good white-collar jobs are scarce, and AI is feared, like in much of the world, to be taking the best of the services export sector. Modi will know that the gap between expectation and reality saw regime change in Sri Lanka, Bangladesh and Nepal between 2022 and 2025.
UNITED STATES. Unforced error
More tariffs on the road to serfdom.
New tariffs between 10 and 12.5% were imposed on 60 countries Friday following an investigation under Section 301 of the Trade Act on forced labour practices. Countries with the highest duties included New Zealand, Norway and Uruguay.
INTELLIGENCE. New Zealand isn’t a known centre of modern slavery. That Cambodia and Pakistan only got a 10% levy, and that Eritrea and Mauritania, often seen as the worst offenders, didn’t get any, deepens the mystery. The s301 duties replace earlier tariffs under the separate International Emergency Economic Powers Act, struck down by the Supreme Court in February. S301 has had a better record at surviving legal scrutiny, but this is not a guarantee.
FOR BUSINESS. Erratic US trade policy looks set to continue. Still, while the tariffs remain, Trump will have regained some leverage over Washington’s 60 biggest trading partners, which is what today’s list represents. It comes amid a separate US lawsuit against Swiss chocolate maker Lindt over alleged child labour and follows Tuesday’s social media announcement of 100% tariff on generic drugs, to take effect in 2028. No official policy on this has been seen.
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Michael Feller, Chief Strategist