U.S. President Donald Trump and Prime Minister of Japan Sanae Takachi during a meeting in the Oval Office of the White House on Thursday, March 19, 2026 in Washington, DC, U.S.
Aaron Schwartz | CNP | Bloomberg | getty images
Japanese Prime Minister Sanae Takachi embraced President Donald Trump on Thursday, and not just on policy grounds. The newly elected Japanese leader threw himself into the arms of the US President as he welcomed him to the White House.
“Donald, you are the only one who can achieve peace throughout the world,” Takaichi later said during a meeting with reporters in the Oval Office.
There is an important truth behind flattery. Trump is single-handedly shaping the course of global events to a degree that far exceeds anything he achieved in his first presidential term. With his presidency unfettered, his military and other policy decisions are reshaping the economy in real time – and clouding the economic outlook.
Trump’s predecessors were unwilling to make the choices he made in Iran. President Barack Obama’s response to the risk of Iran developing nuclear weapons was to negotiate a multilateral arms agreement. Trump ended it in his first term. Even after the massacre of Israelis by Iran-backed Hamas on October 7, 2023, President Joe Biden attempted to revive it, opting for talks and sanctions pressure.
Trump’s decision to use his authority as commander-in-chief of the military has essentially made him a lever to move global energy prices up or down. Iran’s military has attacked cargo ships and attacked its neighbors’ energy facilities.
Traffic through the vital Strait of Hormuz has come to a standstill. In normal times it carries 20% of the world’s crude oil.
gas prices in usa That’s an increase of nearly a dollar, or 33%, in the past month, according to AAA. More economic turmoil is brewing. The strait is also a conduit for fertilizer components which are becoming increasingly scarce. A Michigan farmer told CNBC this week that the possibility of fertilizer shortages has put American agriculture into “uncharted territory.”
Trump says he predicted that gas prices would rise when he went to war, and sees it as a necessary price to reduce the threat of further Iranian aggression, nuclear and otherwise. The White House says prices will fall sharply once hostilities end. At the beginning of the war, Trump said it would last a long time. Then week. On Friday he said he was not interested in a ceasefire.
Prices may actually fall after the war ends, but right now markets are pricing in an expensive war. Futures markets give traders hope oil price According to FactSet data, it will remain above $80 per barrel until July 2027.
Market concerns reflect the risk that Trump, for all his personal power, will no longer be able to end the war quickly. Iran could use cheap drones, boats and mines to threaten shipping in the Strait of Hormuz. Eliminating that threat may require a ground offensive. Trump said Thursday he was not considering ground forces, but the U.S. military was sending more personnel and ships to the region.
The bloody ground fighting will take weeks or months for oil prices to return to normal, while an escalation of the conflict could cause further damage to energy production facilities in the region. Whether such an operation moves forward is largely up to Trump. Teaming up with Israeli Prime Minister Benjamin Netanyahu, Trump has to decide whether the potential national-security benefits of a humiliated Iran are worth the hit to Americans’ wallets.
Congress may involve itself in Iran war
Similar legislation focused on curbing the president’s power over tariffs has received slightly more support in Congress, but no such measures have become law. In February the Supreme Court struck down many of the President’s tariffs, but he responded by immediately imposing new tariffs.
It is the Federal Reserve’s remit to help ensure that inflation remains under control and workers remain employed despite other changes in policy. Both Iran and the tariffs risk creating the inflation problems the Federal Reserve was designed to solve.
Trump’s consolidation of power is complicating those efforts.
No new Fed chair likely any time soon
On March 13, a federal court quashed the subpoena. The charges issued by a Justice Department prosecutor charge Trump and his associates with alleging that the feds misused public funds in an ongoing building renovation project. Senator Thom Tillis, R-N.C. has said he will not vote to nominate Trump’s nominee Kevin Wersh to lead the Fed until the investigation is resolved. Current Fed Chairman Jerome Powell has said he will remain in office indefinitely in some capacity while the investigation continues.
The judge’s decision about the subpoena could have been the moment Powell could walk out and let Warsh in. But the Justice Department decided to appeal. And Trump appears to be supporting that plan, saying Thursday he still believes there was “criminality” involved in the renovation cost increases.
The White House has said the Justice Department investigation is independent of Trump’s decision. Despite this, the investigation is moving forward, putting the conflict between the president and the Fed at the center of the market indefinitely, at a time when Trump’s other policies are making the economic outlook just as difficult to forecast.
The only way to know how many of the biggest policy decisions facing America will fail is to get inside Trump’s mind.
Presidents love to brag about the great impact they have on the economy, especially when it’s doing well. This is often exaggerated. But this economy, warts and all, is Trump’s creation. Everyone from the Prime Minister of Japan on down is along for the ride.