U.S. President Donald Trump and Japanese Prime Minister Sanae Takaichi meet during a meeting in the Oval Office of the White House on Thursday, March 19, 2026, in Washington, DC.
Aaron Schwartz | CNP | Bloomberg | Getty Images
Japanese Prime Minister Sanae Takaichi hugged President Donald Trump on Thursday, and not just for policy reasons. Japan’s newly elected leader threw himself into the arms of the US president as he welcomed him at the White House.
“Donald, you are the only one who can achieve peace in the world,” Takaichi said when the two met in front of reporters in the Oval Office.
There is an important truth behind the flattery. Mr. Trump single-handedly shapes the direction of world affairs, far exceeding the power he wielded as the first president. Unshackled by the presidency, his military and other policy decisions are reshaping the economy in real time and clouding the economic outlook.
Mr. Trump’s predecessors were not willing to make the choices he made on Iran. President Barack Obama’s response to the risk that Iran could develop a nuclear weapon was to negotiate a multilateral arms agreement. Trump abolished it during his first term. President Joe Biden chose negotiations and sanctions pressure to try to revive Iran-backed Hamas even after it massacred Israelis on October 7, 2023.
President Trump’s decision to use his powers as commander-in-chief of the military effectively made him the lever that moves global energy prices up and down. Iranian forces attacked cargo ships and attacked energy facilities in neighboring countries.
Traffic in the vital Strait of Hormuz has been disrupted. In normal times, it transports 20% of the world’s crude oil.
U.S. gas prices have soared nearly $1, or 33%, over the past month, according to AAA. Further economic turmoil is brewing. This strait is also a passageway for fertilizer ingredients that are rapidly becoming scarce. Potential fertilizer shortages are putting U.S. agriculture in “uncharted territory,” a Michigan farmer told CNBC this week.
President Trump has said he expects gasoline prices to rise if the country goes to war, a price he believes is necessary to neutralize the threat of further Iranian aggression, nuclear or otherwise. The White House says prices will fall sharply once hostilities end. At the start of the war, President Trump said the war would last several days. A few weeks later. He said Friday he was not interested in a ceasefire.
It’s true that prices may fall once the war ends, but for now the market is pricing in a costly war. The futures market shows that traders expect: oil price It is expected to remain above $80 a barrel through July 2027, according to FactSet data.
Market concerns reflect the risk that President Trump may no longer be able to quickly end the war, even with all his personal efforts. Iran can use cheap drones, boats, and mines to threaten shipping in the Strait of Hormuz. A ground invasion may be necessary to eradicate the threat. President Trump said Thursday that ground troops were not being considered, but the U.S. military is sending more personnel and ships to the region.
A bloody ground war would likely take weeks or months for oil prices to return to normal, but an escalation could cause further damage to the region’s energy production facilities. Whether this type of operation is carried out depends largely on President Trump. President Trump, along with Israeli Prime Minister Benjamin Netanyahu, will decide whether the potential national security benefits of an Iranian attack are worth the hit to Americans’ wallets.
Congress could intervene in Iran war
In theory, Congress has a role in these decisions, just as it does in tariffs. The Senate voted Wednesday not to take action to limit the president’s war powers after Democrats pursued the issue.
Similar bills focused on curbing the president’s power over tariffs have gained some support in Congress, but such measures have not become law. The Supreme Court struck down many of the president’s tariffs in February, but the president immediately responded with new ones.
Despite other policy changes, it is the Federal Reserve’s power to control inflation and help keep workers employed. Both Iran and tariffs risk creating the inflation problem the Fed was trying to solve.
President Trump’s accumulated authority complicates these efforts.
A new Fed chair likely won’t appear soon
On March 13, a federal court quashed a subpoena issued by Justice Department prosecutors over claims by Mr. Trump and his allies that the Fed misused public funds on ongoing building renovation projects. Sen. Thom Tillis (R.N.C.) said he will not vote to promote Kevin Warsh, President Trump’s nominee for Federal Reserve chairman, until the investigation is resolved. Current Fed Chairman Jerome Powell has said he will remain in office in some capacity indefinitely while the investigation continues.
The judge’s ruling on the subpoena could have been the moment Powell could have stepped down and Warsh could have taken his seat. However, the Justice Department decided to appeal. And President Trump appears to support the plan, saying Thursday that he still believes “crime” was involved in cost overruns on the renovations.
The White House said the Justice Department’s investigation is independent of President Trump’s decisions. Either way, the investigation continues to keep the president’s conflict with the Fed front and center in markets, even as Trump’s other policies make the economic outlook more difficult to predict than ever.
The only way to know how many of the biggest policy decisions facing America will be broken is to know what’s inside President Trump’s head.
Presidents like to boast about having a big impact on the economy, especially when the economy is doing well. Often exaggerated. But this economy, warts and all, is because of President Trump. Everyone from the Prime Minister of Japan on down will participate.
