With Iran war cooling, Trump is refocusing on tariffs

Trump Reinstates Tariff Focus as Iran Conflict Eases

With Iran war cooling Trump is refocusing – President Donald Trump, a vocal advocate for protectionist policies, has shifted his economic strategy following the de-escalation of the U.S.-Iran war. Tariffs, which once dominated his rhetoric, have taken a backseat during the conflict’s peak. However, as diplomatic talks between the two nations progress, the issue of import duties is once again at the forefront of his agenda. This renewed focus signals potential challenges for global trade partnerships, especially with allies like France and the European Union.

Threats Against France Resurface

With the G7 Summit approaching in France, Trump has reignited his campaign against the 3% digital service tax imposed by the French government. In a recent interview with the *New York Post*, he warned that if President Emmanuel Macron persists with the tax, the U.S. would retaliate by implementing a 100% tariff on all French wines and Champagnes. This move is particularly targeted at American tech companies, including Amazon, Alphabet, Apple, and Meta, which face higher costs due to the levy.

“I asked him not to charge American companies, and if they do, I have no choice but to charge a 100% tariff on all Champagnes and all wines coming out of France,” Trump stated, emphasizing his determination to pressure France economically.

Trump’s threats are not new. Since the tax was introduced in 2019, he has repeatedly used it as leverage, even issuing a January warning about a 200% tariff on French wines after Macron declined to support his “Board of Peace” initiative in Gaza. Despite these ultimatums, Trump has yet to follow through on the full-scale tariffs, a decision attributed to diplomatic considerations and economic calculations.

Broader Trade Targets Emerge

While France remains a focal point, Trump’s ambitions extend to other European Union members. He has pledged to raise tariffs on EU cars, accusing the bloc of breaching a trade agreement signed earlier this year. This escalation could trigger retaliatory measures, further complicating transatlantic relations. Additionally, the U.S. Trade Representative’s office recently proposed tariffs starting at 12.5% on goods from Japan, China, and India, citing concerns over forced labor practices.

These new tariffs are set to take effect after a temporary 10% import tax expires in July. The timing is strategic, as the U.S. economy grapples with inflationary pressures. Despite the recent easing of the Middle East conflict, the impact of the war on global markets has lingered, contributing to rising prices.

Legacy of Tariff Policies

Trump’s previous tariff actions in April 2026 had a significant ripple effect on the American economy. The sweeping levies, targeting imports from multiple countries, disrupted supply chains and paralyzed business decisions. However, the Supreme Court later struck down most of these measures, offering some relief to industries affected by the sudden trade shifts. A year later, the initial shock of tariffs is fading, yet their long-term consequences continue to shape labor markets and consumer behavior.

Employers who delayed hiring due to the uncertainty caused by Trump’s trade policies are now restarting recruitment efforts. Over the past three months, the U.S. has added an average of 188,000 jobs monthly—a stark contrast to the 10,000 jobs gained each month in the previous year. This rebound suggests that the labor market is adapting to the changing trade landscape, though it remains fragile.

Inflation Trends and Economic Uncertainty

Meanwhile, inflation remains a critical concern for policymakers. Before the U.S.-Iran war, annual inflation stood at 2.4%, but it surged to 4.2% in May 2026, the highest level in three years. Monthly price increases of 0.5% have been driven largely by energy costs, which account for 60% of the inflationary rise. This trend has raised fears of a prolonged economic slowdown, with businesses potentially passing on higher energy expenses to consumers.

Economists, however, note that a key indicator, core inflation, provides a more nuanced picture. By excluding volatile food and energy prices, core inflation remained at 0.2% monthly and 2.9% year-to-date. This suggests that, for now, the Middle East conflict has not significantly fueled broader inflation in services and other goods. Nonetheless, energy costs remain a wildcard, as they can still influence pricing across sectors.

Global Implications of Trade Retaliation

The potential for new tariffs adds to the complexity of the current economic climate. France, already under pressure from Trump’s threats, could face retaliatory measures from the European Union, which has expressed solidarity with its member states. The USTR’s proposals on Japan, China, and India also highlight Trump’s broader geopolitical strategy, linking trade policy to labor standards and national interests.

Analysts suggest that the combination of pandemic-era inflation and the ongoing Middle East conflict has created a dual challenge for the U.S. economy. While the immediate effects of tariffs may be waning, their cumulative impact could persist. The White House has maintained that the pivot to tariffs is not a sudden shift but a continuation of Trump’s long-standing stance on trade, as stated by spokesperson Kush Desai: “There isn’t a pivot here; the President is responding to an issue on which he has clearly staked a position.”

Expert Insights on Inflationary Pressures

BNP Paribas economists have underscored the interconnected nature of global inflation. In a recent analysis, they argued that the U.S. is experiencing a persistent inflation problem, rooted in both the Middle East conflict and the entrenchment of pandemic-related price increases in service sectors. While energy costs are a major factor, the broader implications of trade tensions and supply chain disruptions could prolong inflationary trends.

Despite these concerns, some market observers remain optimistic. They point to the gradual stabilization of core inflation and the resilience of the U.S. economy in recovering from the initial trade shocks. However, the specter of new tariffs looms large, threatening to disrupt this progress. As Trump continues to leverage trade as a political tool, the balance between economic growth and inflationary risks will remain a central debate.

In summary, the resumption of tariff discussions reflects Trump’s strategic recalibration in light of the evolving Middle East situation. While the immediate threat of a 100% tax on French wines may be a symbolic gesture, it underscores a deeper commitment to using trade policy as a means of exerting pressure on allies. With inflation at a critical juncture and the labor market showing signs of recovery, the coming months will determine whether these measures succeed in achieving their intended economic and political goals.