Overview
Last week, President Trump doubled down on previous calls for the US and Iran to seek a new nuclear deal, announcing that he had sent a letter requesting talks with Tehran in previous weeks. The announcement – which built upon several social media posts and comments by Trump calling for renewed nuclear negotiations – represents a surprising break from the policy of his first presidency, in which he withdrew the US from the Obama-negotiated Joint Comprehensive Plan of Action (JCPOA) and implemented his signature “maximum pressure” sanctions campaign against Tehran to isolate the country and curtail its nuclear and proxy activity. However, the White House has at the same time reimposed many of the sanctions and measures in place under Trump’s first term maximum pressure campaign, and called for a return to the program. With competing interests within and between Tehran and Washington – not to mention Jerusalem and Arab capitals – the chances for a successful Iran nuclear deal 2.0 are slim, with significant consequences for the region and for the US.
Why a Deal Now?
The Trump Administration’s calls for renewed nuclear negotiations with Iran come at a crucial juncture for Tehran and the region. Three of Iran’s most important regional allies – Hamas, Hizballah and Syria’s Assad regime – have crumbled, leaving the country strategically isolated without the usual insulation and power projection of its regional proxy network. With fewer options on the table, at last securing a nuclear bomb seems an attractive option for Iran to reestablish both regional deterrence and strategic prominence. Its nuclear program has made significant strides in the last several years, and its breakout time, or the time it would take to further enrich the necessary uranium to weapons grade, is likely to be just a few weeks or months.
Trump’s public calls for a deal also come as Israel and the US increasingly consider military steps to curtail Iranian influence. Bolstered by the year’s successes against Iranian proxies and led by a notably hawkish, conservative cabinet, Israel is floating military intervention to curtail Iran’s nuclear program and regional influence in general. In a longstanding complication, however, to conduct strikes against Iran’s deep-bunker nuclear facilities, Israel would need military assistance from the US in the form of bunker breaker bombs and intelligence. The Trump administration may now be floating a deal as a final chance for Iran to avert military strikes, and for the US to avoid further regional military entanglement (which President Trump has historically eschewed – although recent expansionist sentiments may indicate a reversal of his thinking). Its traditional military capabilities much degraded by two years of regional conflict, Iran would be unable to respond decisively to any US and Israeli military attacks, making avoiding a kinetic strike desirable to Tehran as well.
On a global regulatory level, Israel and other Western countries seeking to curtail Iranian nuclear development are also racing against a legal clock: the UN framework for global “snap-back” sanctions against Iran expires in October. The snap-back system was originally enshrined by a 2015 UN Security Council agreement recognizing the JCPOA and providing for the implementation of snap-back sanctions if Iran were to be found to have violated the deal. While the sanctions were not imposed following the Trump administration’s original withdrawal from the JCPOA, Iran’s continued enrichment of nuclear material provides a legal basis to apply these sanctions now. The program would require Iran to cease all nuclear enrichment-related activities, and reimpose an import ban on related materials as well as a conventional arms embargo, targeted sanctions on dozens of individuals and entities, and international inspections of Iranian shipments. While international sanctions could be imposed absent the UN snap-back framework, using its structure would make international pressure and enforcement of import bans significantly simpler. Renegotiation of a UN sanctions regime on Iran could be much more difficult this time around if snap-backs are allowed to lapse, given Iran’s increased alignment with Russia and China and general division on the global geopolitical stage.
Early Signals from the US and Iran
Confusingly, President Trump’s repeated calls for negotiations have come alongside significant steps to reimpose and build upon the maximum pressure campaign of his first term. In early February, the president signed a National Security Presidential Memorandum “restoring maximum pressure” on Iran; at its signing, however, he said that he was “torn” about the order, and that he hopes the US will not have to use it very much. Since then, Trump has continued dual steps to ramp up pressure on Tehran and court negotiations, taking steps such as imposing new sanctions on the Iranian sale of oil to China and ending a longstanding waiver that permitted Iraq to purchase electricity from Iran. There is some disagreement whether the first maximum pressure sanctions regime was a policy end in and of itself – with the simple goal of isolating and impoverishing Tehran to limit its capabilities – or an attempt to gain leverage and force Iran back to the negotiating table to secure a nuclear deal more favorable to the US, Israel, and Gulf Arab monarchies. The second time around, the White House’s intentions are equally unclear: ramped up sanctions may be the opening salvo in a hoped-for negotiation with Tehran, or the Iran policy that the Trump administration has intended all along, with a deal or not.
Signals have been equally mixed from Iran. While moderate and reformist politicians in Iran, including President Masoud Pezeshkian, have expressed openness to negotiations, Ayatollah Khomeini, has repeatedly denounced talks with the US. In an impassioned televised speech earlier this week, the Supreme Leader vehemently rejected negotiations with “bully governments,” saying that negotiations would certainly include “new demands” in areas outside the nuclear portfolio, such as “defensive capabilities and international influence.” In the Iranian governmental system, the Ayatollah wields ultimate influence generally, and also typically oversees the country’s foreign policy and defensive strategy. Historically, the Ayatollah has valued regional power projection over day-to-day governance and the economic issues that sanctions reprieves as part of a nuclear deal would be designed to address. However, while reformist calls for negotiation mean little, Khomeini’s denunciation of nuclear talks – while a negative sign – are not necessarily a death knell for a new deal. Tehran may equally be posturing in order to gain leverage in eventual negotiations, projecting a position of strength and telegraphing their unwillingness to touch proxy activity in any potential talks.
Potential Outcomes and Implications
Despite incentives to reach a deal on both sides, it would be difficult to secure an agreement. A potential deal likely has the most possibility for success if it focuses narrowly with the nuclear issue, leaving broader bilateral concerns such as Iran’s proxy network and its support for Russia alone for the time being. However, the parties will likely be misaligned on the scope of the deal, with Iran angling for a narrow focus on the nuclear issue and President Trump will be pressured by Israel, Gulf Arab allies, and Iran hawks in his cabinet to secure agreements on Iran’s proxy network and regional malign activities. Further, the US has in the past decade clung to the goal of rolling back Iran’s nuclear program, a goal that is now almost certainly unattainable.
Despite an aggressive sanctions campaign against Iran, American leverage over the Islamic Republic is much reduced from 2015. Since President Trump slapped maximum pressure sanctions on Tehran for the first time, it has significantly bolstered its economic, diplomatic, and strategic relationships with US rivals Russia and China. Today, China buys around 90% of Iran’s oil, amounting to around $2 billion a month in revenue for Tehran. Existing US sanctions on Sino-Iranian oil trade has complicated, but far from eliminated, the relationship. Iran sells Russia significant defense materiel, including munitions artillery shells, and drones, and in January signed a 20-year “strategic partnership” that does not constitute a defense agreement but call for a significant ramping-up of relations, including military cooperation. As such, American sanctions designed to squeeze Tehran and make its leadership more amenable to a US deal will simply be less effective – as will potential incentives offered by a nuclear pact.
Implications for the Regional and the Global Economy
A nuclear agreement presents benefits for all parties, as well as the global economy. Curtailing Iranian nuclear threats would lower the regional temperature, staving off Iran-Israeli conflict and the broader specter of Iranian malign influence in the region. Sanctions concessions allowing Iranian oil back into Western markets could add slack to global supply, resulting in downward pressure on prices. Reduced Iranian reliance on Russia and China for trade could also have a negative impact on Russia’s ability to fund its war in Ukraine and China’s broader economy, the latter of which is certainly a plus for the Trump administration and Western business attempting to compete with the Chinese economy. Business engagement with Iran could even be on the table – although hampered by a decade of non-engagement and sanctions uncertainty given the Trump White House’s penchant for quick policy reverses.
If a deal is not reached – probably the more likely outcome – there is a significant risk of Israel moving ahead with military strikes against Iranian nuclear capabilities, reigniting the regional conflict and likely drawing the US back into military entanglement in the Middle East. Even with US involvement, strikes against Iranian nuclear infrastructure are not guaranteed to be successful – some Israeli analysts argue that Iranian research and production facilities are now buried so deeply that even American bunker breakers would not reach them. Regardless, a broader war could have significantly destabilizing impacts on the region, disrupting operations there as well as logistics through Gulf and Red Sea maritime hubs (some 30% of global container trade moves through the Suez Canal, and the UAE’s Jebel Ali port was the tenth busiest maritime trade hub in 2024 – the only non-Asian port besides Los Angeles to crack the top ten). Perhaps most crucially, a war with Iran would likely disrupt the global energy market, reducing global supply as Iranian exports to China are curtailed – or, worse, impacting production out of neighboring Gulf states, which produce about 30% of the world’s oil and hold 50% of global reserves. In the long term, the elimination of Iran’s nuclear capabilities would certainly provide stability to the region – but not before significant regional chaos that could have devastating regional effect.
