Pendulum swings back on economy amid Iran conflict

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▪ Trump’s economic challenge

▪ FBI subpoenas Arizona election records

▪ Anthropic sues Pentagon

▪ Iranian soccer players granted asylum

The Trump administration is trying to reassure an economy spooked by the conflict with Iran just weeks after recent jobs and inflation reports provided some sense of optimism.

President Trump asserted the U.S. would not allow Iran to continue to restrict global oil supply through its virtual closure of the Strait of Hormuz, a key shipping lane between Iran and Oman. Tehran said following the initial U.S.-Israeli strikes that it would attack any ship attempting to pass through, effectively closing it to traffic.

“I will not allow a terrorist regime to hold the world hostage and attempt to stop the globe’s oil supply. And if Iran does anything to do that, they’ll get hit at a much, much harder level,” Trump said at a press conference Monday.

At the same time, he argued the bottleneck isn’t as much a concern for the U.S. as it is for other countries, especially China.

But the development has rocked prices and markets both inside and outside the U.S.

Energy costs have shot up over the past week since the offensive against Iran began, targeting the regime’s military sites and top leaders. The cost of oil jumped to more than $115 per barrel overnight into Monday, the first time that it surpassed $100 since Russia started its full-scale invasion of Ukraine in 2022.

Stock markets started Monday with significant losses as investors were startled by the spike in oil and gas prices.

The costs had calmed down by Monday afternoon, falling back to less than $100 per barrel. Stocks also rebounded to finish the day with net gains, coming after Trump told CBS News in an interview that the war is “very complete, pretty much.”

But the economic situation remains highly volatile, leaving lingering questions about what’s in store for the economy. That’s a significantly different picture from where it stood just weeks ago.

Trump received a boost last month after the January jobs report showed the economy exceeded expectations in gaining 130,000 jobs. The report was coupled with a consumer price index report released days later showing inflation dropped to 2.4 percent, below expectations.

But the past week has changed the narrative. As oil prices spiked and the stock market stumbled as a result of the Iran conflict, data from the Bureau of Labor Statistics (BLS) showed Friday that the U.S. unexpectedly lost 92,000 jobs.

BLS also revised past jobs reports to be lower than originally reported.

Gas prices have jumped to a national average of $3.54 per gallon, up roughly 20 percent since last month.

The Hill’s Rachel Frazin reports it’s unclear how long the disruption to oil markets will last and how high prices will go.

That’s reason for concern for Republicans as the midterm elections get closer, especially as the president already is struggling with his approval ratings on the economy.

Democrats are pouncing on the rise in gas prices and expected increase in airline fares, accusing Trump of worsening Americans’ economic pain through his actions in Iran, The Hill’s Amie Parnes reports.

Trump has said he expects the price hikes will be short-term effects and the American people will be willing to manage through them amid the conflict. He has also floated the possibility of the U.S. providing Navy escorts for oil tankers passing through the Strait of Hormuz, while the U.S. has offered to provide reinsurance for losses up to $20 billion in the Gulf region to boost confidence in oil and gas.

Still, as The Hill’s Al Weaver and Sudiksha Kochi report, congressional Republicans are growing nervous that consumers won’t be willing to swallow the rising costs.

▪ The Hill: The Memo: Trump at risk from oil price roller coaster.

▪ The Hill: Dems vow to shut down Senate business over Iran.

Smart Take with Blake Burman

Crude oil futures, which eventually filter down to how much you pay at the pump, had a historic whiplash Monday. The market seemingly took notice of an interview the president gave during the day, in which he suggested the war could end soon. 

Across the country on Monday, gas hovered around $3.48 for regular unleaded on average. I asked Bob McNally, a former energy adviser to President George W. Bush, where prices could head from here. He thinks they’re likely going higher.

“Gasoline that you and I pay for at the station follows crude oil with a one-to-two-week lag. Gasoline still has catching up to do,” McNally said. 

Trump said the U.S. Navy will escort tankers through the crucial Strait of Hormuz, if needed. McNally said the market will actually need to see tankers streaming back and forth. When those images come, that could very well be a turning point for prices at the pump.

Burman hosts “The Hill” weeknights, 6p/5c on NewsNation.

3 Things to Know Today

Trump on Monday again suggested the Iranian government was to blame for the bombing of an all-girls school in southern Iran but said he doesn’t “know enough about it” as evidence mounts that the U.S. was responsible. More than 160 people were killed in the strike.

A federal judge ruled three officials who were tapped to head the U.S. attorney’s office in New Jersey are leading the office unlawfully, the latest condemnation of the administration’s attempts to fill the role without congressional approval.

Secretary of State Marco Rubio designated Afghanistan as a “state sponsor of wrongful detention,” calling on the Taliban to release two U.S. citizens he said are “unjustly detained.”

TIMETABLE UNCLEAR: Trump indicated he may be planning to wrap up the operation against Iran sooner than he originally said but was noncommittal on Monday about his timeline.

The president initially gave a timeline of four to five weeks soon after the initial strikes began on Feb. 28. But he’s faced pressure on the exit strategy amid mixed messaging from members of his administration and the deaths of more than a half dozen U.S. service members.

Trump called the operation an “excursion” during his Monday press conference, saying the operation would end “very soon.” But he said it wouldn’t end in the coming days or by the end of the week.

He said the U.S. is “achieving major strides toward completing our military objective, and some people could say they’re pretty well complete.” His remarks came after an account on X for the Pentagon posted earlier in the day, “We have Only Just Begun to Fight.”

The comments continue the often-contradictory signals from the administration since the conflict started.

Trump said he supports the idea of “internal” regime change within Iran, walking back comments calling for the overthrow of the regime. He said his vision is similar to how the U.S. handled Venezuela, removing former President Nicolás Maduro but leaving the regime intact after the new leaders agreed to U.S. economic demands.

He said he was “disappointed” to see Iran choose Mojtaba Khamenei as the country’s next supreme leader. Khamenei is viewed as a hard-liner at least as much as was his father, the late Supreme Leader Ayatollah Ali Khamenei.

▪ The Hill: Five takeaways from Trump’s press conference.

▪ The Wall Street Journal: Trump advisers urge exit ramp on Iran.

▪ The Hill: Trump says SAVE America Act will ‘guarantee the midterms.’

TO THE COURTS: The AI company Anthropic has filed a lawsuit against the Pentagon, challenging its decision to label the company and its products a “supply chain risk.”

The company filed the case in federal court in California on Monday, arguing the Pentagon’s designation and an order from the president for all federal agencies to cease use of Anthropic’s products are “unprecedented and unlawful.”

Anthropic and the Department of Defense have engaged in a back-and-forth in recent weeks over a contract providing the Pentagon with access to the AI model Claude. But Anthropic has insisted on the department agreeing not to use the model for mass surveillance or autonomous weapons that don’t require human involvement.

The Pentagon has rejected those terms, asserting that it should be able to use Claude for “all lawful purposes.” Anthropic CEO Dario Amodei said the company couldn’t “in good conscience” agree.

The supply chain risk designation is rare and typically reserved for foreign adversaries. It restricts defense contractors from using a company’s products.

Anthropic’s lawyers said the case is a “last resort” and accused the federal government of retaliating against the company for its position on the use of its own AI model.

White House spokesperson Liz Huston told The Hill that Trump won’t “allow a radical left, woke company to jeopardize” national security.

Anthropic also filed a separate lawsuit in the federal appeals court in Washington, D.C., to request a review of the determination that it poses a national security risk.

▪ The Hill: Government surveillance fears fueled by standoff.

▪ CBS News: Anthropic tracking jobs most exposed to AI.

FBI SUBPOENA: The Trump administration’s probe of 2020 election records has seemingly expanded as the FBI issued a subpoena Monday for data on the Arizona state Senate’s audit of Maricopa County election results.

Arizona Senate President Warren Petersen (R) confirmed the subpoena, saying in a post on the social platform X that he received it and complied late last week.

The subpoena follows a “court authorized law enforcement action” the FBI carried out at the main elections office in Fulton County, Ga., earlier this year. Fulton and Maricopa counties have both been centerpieces of Trump and his allies’ continued false claims of fraud costing him the 2020 election.

Former President Biden won Maricopa County by about 2 points, and that victory was confirmed by a company the Arizona Senate hired to conduct an audit of the results.

Arizona Attorney General Kris Mayes (D) condemned the subpoena in a statement, calling it a “weaponization of federal law enforcement in service of crackpots and lies.”

SPECIAL ELECTION: Voters are heading to the polls in one House district in Georgia today to vote on who they want to succeed former Rep. Marjorie Taylor Greene (R-Ga.).

More than a dozen candidates are running on the same ballot to represent Georgia’s 14th Congressional District, which has been without representation since Greene’s decision to step down from her seat in January.

Clayton Fuller, the district attorney for the Lookout Mountain Judicial Circuit, is the favorite with an endorsement from the president. But the top candidate must win a majority of the vote to avoid a runoff next month, and that may be likely with so many candidates in the race.

Primary elections are also being held Tuesday in Mississippi, following initial midterm primaries last week in Texas, North Carolina and Arkansas.

▪ The Hill: What to know about the race to replace Greene.

MULLIN HEARING: The confirmation hearing for Sen. Markwayne Mullin (R-Okla.) as the next secretary of Homeland Security may come as soon as next week.

Sen. Rand Paul (R-Ky.), the chair of the Senate Homeland Security and Governmental Affairs Committee, told reporters he hopes to hold the hearing next Wednesday.

Republicans have largely rallied around Mullin as a successor to outgoing Secretary Kristi Noem, who has been the subject of rising controversy in recent months. Noem is set to leave her role at the end of the month.

Mullin and Paul have feuded at times in the past, including last month when Mullin reportedly called him a “freaking snake.” But Paul has said he would reserve judgement on his colleague’s nomination ahead of the hearing.

▪ The Hill: Who could run to replace Mullin.

GOING INDEPENDENT: California Rep. Kevin Kiley announced that he is formally leaving the Republican Party to become an independent.

Kiley decided to run for reelection as an independent in the aftermath of California’s redistricting measure, which made his district more Democratic-friendly.

But he went further Monday, saying he will ask the House clerk to drop his identification as a Republican for the rest of the current Congress.

“I will be the sole independent member of the House of Representatives,” Kiley told reporters during a virtual press conference.

Kiley’s departure from the GOP will technically lower the Republican majority further to 217-214. But Kiley said he will continue to caucus with the Republicans since he was elected as a member of the party.

The congressman said the ongoing gerrymandering battle from both parties led to his switch, expressing disgust with partisanship.

▪ The Hill: Stephen A. Smith doesn’t think he’ll run for president in 2028.

ISIS INSPIRATION: The attempted attack at a protest near New York City Mayor Zohran Mamdani‘s (D) residence was inspired by the Islamic State (ISIS), officials said Monday.

Attorney General Pam Bondi said two individuals have been indicted in connection with the incident. The criminal complaint accuses them of an attempted terrorist attack.

“We will not allow ISIS’s poisonous, anti-American ideology to threaten this nation,” Bondi said. “Our law enforcement officers will remain vigilant.”

No one was injured from the explosive device that was ignited at the protest outside the mayor’s mansion, police said. The indictment states both men referred to ISIS during their detention.

One device was thrown at a group of protesters, while another was thrown at officers, according to the indictment.

▪ The New York Times: Mamdani chooses his words carefully about the attack.

ANTITRUST SETTLEMENT: Live Nation, the parent company of Ticketmaster, has reached a settlement with the Department of Justice (DOJ) in a case that alleged antitrust violations against the event promoter.

A senior DOJ official told reporters the proposed agreement would have Live Nation pay $280 million in civil penalties to the states involved in the case. The DOJ, along with many state and district attorneys general, had sued Live Nation and Ticketmaster in May 2024, accusing them of blocking competition in the entertainment industry.

That came after mounting public scrutiny on the companies following an online meltdown Ticketmaster suffered in 2022 during Taylor Swift’s online presale for her “Eras Tour.”

Under the agreement, Ticketmaster would offer a stand-alone ticketing platform that allows third parties, such as SeatGeek and StubHub, to use its technology. Live Nation agreed to divest from 13 amphitheaters it owns or leases across the country and to reserve at least 50 percent of tickets for entities that don’t have exclusive agreements with the company, among other measures.

Despite the tentative agreement, not all states are on board. New York Attorney General Letitia James (D) said she and 25 other attorneys general would continue the case.

▪ Variety: Sen. Amy Klobuchar (D-Minn.) slams settlement as ‘weak.’

The president will participate in executive time at 8 a.m. He will have policy meetings at 3 p.m. and 4:30 p.m.

The Senate will meet at 10 a.m.

The House is out today.

RETIREMENT OPPORTUNITY: Wisconsin Supreme Court Justice Annette Ziegler’s announcement that she will not run for reelection in 2027 could give liberals a key opportunity as they seek to expand their majority on the bench.

Ziegler, one of the court’s three conservatives, revealed Monday she doesn’t plan to run for reelection when her current term ends after serving on the court for three decades. She said she wants to spend more time with family.

Her decision comes less than a month before Wisconsin voters are set to vote on who should succeed retiring conservative Justice Rebecca Bradley. Liberals currently hold a 4-3 advantage and hope Wisconsin Court of Appeals Judge Chris Taylor, who is backed by Democrats, can defeat conservative appellate Judge Maria Lazar on April 7.

Taylor holds a significant fundraising advantage over Lazar.

With Ziegler retiring, liberals will be eyeing a chance to establish even more control of the court. Conservatives held a majority on the court for 15 years until liberal Justice Janet Protasiewicz defeated former state Supreme Court Justice Daniel Kelly in 2023, flipping control.

▪ Bolts: Liberals aim to control Wisconsin Supreme Court through 2030.

▪ NOTUS: Court race stays quiet a year after Elon Musk’s spending blitz.

ASYLUM GRANTED: Australia has granted asylum to five members of the Iranian women’s soccer team after taking part in what was interpreted as an act of protest against the Iranian regime.

Australian Home Affairs Minister Tony Burke announced the decision Tuesday following lobbying from Trump the day before. Federal police officers took the players from their hotel to a “safe location” before the athletes met with Burke and their humanitarian visas were finalized.

Ahead of a match of the Asia Cup last week, members of the team remained silent as the Iranian national anthem played, viewed by some as an act of resistance. Iranian state media called them traitors, and fears rose that the team could be in danger if they returned to Iran, The New York Times reported.

Trump in a post on Truth Social on Monday vowed to protect the team members if Australia wouldn’t grant them asylum.

The team reportedly numbers about 20 women.

“I say to the other members of the team the same opportunity is there,” Burke said. “Australia has taken the Iranian women’s soccer team into our hearts.”

The news comes as the Iranian men’s soccer team is scheduled to play in the U.S. for World Cup matches this summer. But the team’s status to play in the World Cup has been in doubt as the conflict between the U.S. and Iran has widened, The Hill’s Dominick Mastrangelo reports.

▪ The Guardian: Iran could face FIFA ban if it withdraws from World Cup.

Strategic bombing only worked once, Harlan Ullman writes in The Hill.

Trump is trying something new in Iran. Hold on tight, Douglas J. Feith writes in The Washington Post.

And finally … The National Park Service (NPS) announced fireworks will return at Mount Rushmore in celebration of Independence Day after a five-year hiatus.

NPS said in a release Monday that fireworks will be launched at the landmark in South Dakota on July 3, which will be the first time they have been used there since 2020. Fireworks hadn’t been launched at Mount Rushmore for more than a decade before that over wildfire risks.

NPS denied requests for fireworks at the national memorial multiple times during the years of the Biden administration. The agency said the return of the fireworks reflects Trump’s “vision of a ‘grand celebration worthy of the momentous occasion of the 250th anniversary of American Independence.’”

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