Trump's Weak Dollar Stance Hides a Major Risk for Investors

U.S. Secretary of State Marco Rubio laid out the Trump administration's strategy for Venezuela in testimony before the Senate Foreign Relations Committee, outlining a plan that combines diplomatic engagement with the threat of military intervention following the ouster of Nicolas Maduro.

The hearing comes after a U.S. military operation in Caracas that resulted in the capture of the former Venezuelan leader, who was taken to New York for a criminal trial. Venezuela's first lady, Cilia Flores, was also taken into custody during the operation.

U.S. Secretary of State Marco Rubio testifies before the Senate Foreign Relations Committee on the Trump administration's policy toward Venezuela.

US Policy: Monitoring, Diplomacy, and the Threat of Force

With former Vice President Delcy Rodriguez now serving as Venezuela's acting president, Rubio stated that the U.S. will be watching the new leadership closely.

"We will closely monitor the performance of the interim authorities as they cooperate with our stage-based plan to restore stability to Venezuela," Rubio testified. "Make no mistake, as the president has stated, we are prepared to use force to ensure maximum cooperation if other methods fail."

Despite the explicit threat, Rubio asserted that there is "good and decent progress in Venezuela," adding that "we are certainly better off today in Venezuela than we were four weeks ago."

As part of its diplomatic strategy, the U.S. plans to increase its presence in the country. Rubio announced that steps are underway to reopen the U.S. Embassy in Caracas, which closed in 2019. He noted this would provide "real-life information" and enhance engagement with both the Venezuelan government and opposition. Following the hearing, Rubio is scheduled to meet with Venezuelan opposition leader and Nobel Prize Laureate Maria Corina Machado.

Controversy Brews Over US Control of Oil Revenue

A central point of the new U.S. policy involves managing the revenue from Venezuela's oil sales. Rubio detailed a plan where money generated from the country's oil—the largest reserves in the world—will be deposited into a bank account controlled by the U.S. Treasury. From there, he said, the Venezuelan government would "spend that money for the benefit of the Venezuelan people."

This arrangement has drawn sharp criticism. Senator Chris Murphy of Connecticut challenged Rubio directly, referencing President Trump's previous statement that "Venezuela is going to get some, and we're going to get some." Both Venezuelan officials and U.S. Democrats have accused the administration of attempting to seize the country's oil wealth.

"The scope of the project that you are undertaking in Venezuela is without precedent," Murphy told Rubio. "You are holding and selling that oil, putting for now the receipts in an offshore bank account... You're deciding how and for what purposes that money is going to be used in a country of 30 million people. I think a lot of us believe that is destined for failure."

Beyond Venezuela: Rubio on Greenland and Iran

During the hearing, Rubio also addressed other foreign policy priorities for the Trump administration.

On Greenland, a territory of NATO ally Denmark that President Trump has threatened to take over, Rubio signaled a diplomatic path forward. "There'll be some technical level meetings between us and our partners in Greenland and Denmark on this issue," he said, expressing confidence in a process that will lead to "a good outcome for everybody."

Regarding Iran, Rubio commented on the ongoing protests against the government. He characterized the Iranian regime as exceptionally vulnerable, stating it is "probably weaker than it has ever been." He argued that the core driver of the protests is economic collapse, a complaint the government cannot easily address. His comments come as President Trump threatens military action if Iran does not agree to a new nuclear deal.

Source: Bloomberg Europe

U.S. President Donald Trump has issued a stark warning to Iran, stating that time is running out to negotiate a new agreement and avoid potential military action. Tehran quickly retorted, promising to respond to any attack "like never before."

The escalating rhetoric comes after a deadly crackdown on widespread protests within Iran. Trump has not ruled out an attack, and a U.S. naval strike group, led by the aircraft carrier USS Abraham Lincoln and described by Trump as an "armada," is currently positioned in Middle Eastern waters.

This follows a previous U.S. military operation last June, when American forces conducted a night of strikes against Iranian nuclear sites during Israel's 12-day war with the Islamic republic.

Figure 1: Former U.S. President Donald Trump, pictured at a rally, has intensified pressure on Iran with public warnings about military consequences.

A War of Words and Warnings

In a post on his Truth Social platform, Trump bypassed the recent protests and focused directly on Iran's nuclear program, which Western powers believe is aimed at developing an atomic bomb.

"Hopefully Iran will quickly 'Come to the Table' and negotiate a fair and equitable deal — NO NUCLEAR WEAPONS — one that is good for all parties. Time is running out, it is truly of the essence!" Trump wrote.

He referenced the American strikes in June, which he claimed resulted in "major destruction of Iran," and added, "The next attack will be far worse! Don't make that happen again."

In a direct reply, Iran's mission to the United Nations posted a screenshot of Trump's post on X, stating: "Iran stands ready for dialogue based on mutual respect and interests — BUT IF PUSHED, IT WILL DEFEND ITSELF AND RESPOND LIKE NEVER BEFORE!"

Analysts suggest that potential U.S. military options could range from strikes on military facilities to targeted operations against the leadership under Ayatollah Ali Khamenei, in an effort to destabilize the regime that has governed Iran since the 1979 Islamic revolution.

Regional Diplomacy Amid Military Threats

Before Trump's comments were published, Iranian Foreign Minister Abbas Araghchi dismissed the idea of negotiating under duress. "Conducting diplomacy through military threat cannot be effective or useful," he said in a televised statement, adding that the U.S. must "set aside threats, excessive demands and raising illogical issues." Araghchi also stated that he has had "no contact" with U.S. Middle East envoy Steve Witkoff and that "Iran has not sought negotiations."

Echoing this defiant tone, Iranian armed forces chief of staff Habibollah Sayyari warned the U.S. against any "miscalculation," asserting that "they too would suffer damage."

In an apparent bid to rally regional support, Iran has engaged in a flurry of diplomatic activity:

• Iranian President Masoud Pezeshkian held a call with Saudi Arabia's de facto leader, Crown Prince Mohammed bin Salman.

• Ali Larijani, Secretary of Iran's Supreme National Security Council, spoke with Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani.

• Egyptian Foreign Minister Badr Abdelatty held separate calls with both Araghchi and Witkoff to stress the need for de-escalation.

• Turkey's Foreign Minister Hakan Fidan told Al-Jazeera, "It's wrong to attack Iran. It's wrong to start the war again," and urged Washington to resume nuclear talks.

Severe Internal Crackdown Heightens Stakes

The international standoff is unfolding against the backdrop of a brutal domestic crackdown in Iran. A wave of demonstrations that began in late December and peaked on January 8 and 9 has been met with lethal force.

The U.S.-based Human Rights Activists News Agency (HRANA) released an updated toll, detailing the scale of the violence:

• Verified Deaths: 6,221 people killed, including 5,856 protesters, 100 minors, 214 security force members, and 49 bystanders.

• Arrests: At least 42,324 people have been arrested.

• Under Investigation: HRANA is still investigating another 17,091 potential fatalities, suggesting the actual death toll could be much higher.

The group warned of "new dimensions of the continued security crackdown," reporting that security forces were actively searching hospitals to find and arrest wounded protesters.

Meanwhile, Iran's judicial system is moving against those arrested. HRANA reported that the trial of a man accused of killing a police officer, which began Tuesday in Malard, is the "starting point for a broad series of trials" expected to impose "severe penalties on protesters." These fears were amplified when Iran's judiciary announced on Wednesday the execution of a man arrested last year, who was charged with spying for Israel's Mossad agency, raising concerns that protesters could also face the death penalty.

Facing backlash over fatal shootings by U.S. border and immigration agents, President Donald Trump delivered a speech in Iowa aimed at redirecting public attention to the economy. In a pitch tailored for midterm voters, he framed his first year in office as the most successful start to any presidential administration in American history.

Donald Trump addresses voters in Iowa, emphasizing economic growth as a key theme for the upcoming midterm elections.

Touting an Unprecedented Economic Record

Speaking in the Republican stronghold on Tuesday, Trump painted a picture of broad prosperity. "Today, after just one year of President Trump, our economy is booming, incomes are rising, investment is soaring, inflation has been defeated," he declared. "Our border is closed – totally closed – and America is respected all over the world."

To support his claims, Trump pointed to several key indicators:

• Stock Market: He highlighted the U.S. stock market's performance, which has reached record highs, as direct evidence of his tax cuts and tariffs succeeding.

• Corporate Investment: He cited a $70 million investment by farm-equipment manufacturer Deere & Co. in North Carolina.

"I made a lot of people rich that I don't even like… I've doubled their net worth," the president added.

Midterm Stakes and Political Warnings

The speech also served as a stark warning about the upcoming November midterm elections. With a growing backlash to his immigration policies in neighboring Minnesota, Trump argued that a Democratic victory would unravel his administration's progress.

"If we lose the midterms, you'll lose so many of the things that we're talking about, so many of the assets that we're talking about, so many of the tax cuts that we're talking about," he cautioned.

Trump also took aim at criticism over cost-of-living issues, accusing Democrats of manufacturing the problem for political gain. "It's a word that they came up with: 'affordability'. Every time you hear the word, remember, they are the ones who caused the problem," he said, while falsely claiming his administration had lowered grocery prices and had inherited the highest inflation in history.

Data Reveals a More Complex Reality

Despite Trump's confident rhetoric, his economic pitch arrives amid signs of public disillusionment. His handling of the economy is considered one of his strongest issues for the 2024 election campaign, yet a New York Times/Siena poll released last week found that only 32 percent of Americans believe the economy is better than it was a year ago.

While the U.S. economy has outperformed many analysts' expectations, economists note that headline figures mask underlying weaknesses. Gross domestic product (GDP) recorded an annualized growth of 4.3 percent in the final quarter of 2025—the strongest performance in two years and significantly ahead of other advanced economies.

However, the benefits of this growth have not been evenly distributed. According to estimates from Moody's Analytics, the economic gains have disproportionately flowed to wealthier Americans, with the top 10 percent of earners accounting for approximately half of all spending.

Iran's mission to the United Nations issued a stark warning on Wednesday, promising an "unprecedented" retaliation against any potential U.S. attack in a direct response to military threats from President Donald Trump.

Iran's Supreme Leader Ayatollah Ali Khamenei, whose government has warned of severe consequences for any U.S. military action.

Tehran's Diplomatic Warning Shot

In a social media post, the Iranian mission stated that while the country "stands ready for dialogue based on mutual respect and interests," it will take decisive action if pressured.

"IF PUSHED, IT WILL DEFEND ITSELF AND RESPOND LIKE NEVER BEFORE!" the mission wrote on X. The statement was published alongside a screenshot of Trump’s earlier threat that a "massive Armada" was moving toward the Islamic Republic.

Recalling the High Cost of Past Conflicts

To underscore its warning against U.S. intervention, the Iranian mission referenced the human and financial toll of America's recent wars.

"Last time the U.S. blundered into wars in Afghanistan and Iraq, it squandered over $7 trillion and lost more than 7,000 American lives," the mission stated, framing any new conflict as a potential misstep for Washington.

Trump Doubles Down on Military Option

The exchange followed President Trump's renewal of threats to attack Iran, asserting that "time is running out" for a deal on nuclear weapons.

"As I told Iran once before, MAKE A DEAL! They didn't, and there was 'Operation Midnight Hammer,' a major destruction of Iran," Trump said. "The next attack will be far worse!"

Trump has consistently kept the possibility of new military action on the table. This stance comes after a 12-day war in June where Washington joined Israel in operations aimed at degrading Iran's nuclear and ballistic missile programs.

Upon returning to office in January 2025, Donald Trump began to reshape U.S. policy in Asia with unprecedented authority, sidelining Congress and installing a loyalist administration. This second term saw Trump exert extraordinary control over the federal government, the Republican-led Congress, and a Supreme Court dominated by Republican appointees, including three of his own. Unlike his first term, dissent within the White House was virtually nonexistent, giving him a free hand to pursue his agenda with China and Taiwan.

Trump's Pivot: From Tariffs to Summits with Xi

The year began with friction. The Trump administration engaged in two brief but intense standoffs with Beijing in April and October, with both sides threatening massive tariffs and severe export controls. However, the confrontations quickly gave way to compromise, culminating in an amicable in-person summit between Trump and President Xi Jinping on October 28.

This meeting set a new tone. In the months that followed, both Washington and Beijing focused on maintaining stability and securing positive outcomes for Trump's planned visit to China in April and a reciprocal visit by Xi to the U.S. later in the year.

The summit with Xi was the capstone of a successful week-long tour of East Asia. Despite his general unpopularity in the region, Trump's meetings with ASEAN leaders in Malaysia and summits with Japanese and South Korean counterparts were positive. An earlier meeting in Washington with Australia's prime minister also went smoothly.

Taiwan Caught in the Middle Amid Mixed Signals

This trend of rapprochement left officials in Taiwan concerned. The Taiwanese government struggled to secure a tariff-reduction agreement with the United States. Adding to the anxiety, the Trump administration reportedly took several actions in deference to Beijing ahead of the October summit:

• A planned U.S. visit by Taiwan's defense minister was halted.

• A U.S. stopover by Taiwan's President Lai Ching-te was blocked.

• Public announcements of U.S. warships transiting the Taiwan Strait ceased.

• Key arms sales to Taiwan were delayed.

After the summit, Trump stated that Taiwan was not discussed. However, the administration later sent reassuring signals. In November, two arms sales packages worth over $1 billion were confirmed. On December 2, Trump signed the Taiwan Assurance Implementation Act into law. This was followed by a December 17 announcement of an $11 billion sale of sophisticated arms to Taiwan. By January 15, 2026, the U.S. and Taiwan announced a trade deal that lowered tariffs to 15% and promised $250 billion in Taiwanese investment in American semiconductor and technology manufacturing.

Despite these positive developments, the mixed signals fueled fears in Taiwan that Trump's focus on deal-making could lead to a compromise with Beijing at Taiwan's expense. The administration's November 30 National Security Strategy did little to clarify matters, notably omitting China as a specific danger. The National Defense Strategy, released on January 23, prioritized the Western Hemisphere over the Indo-Pacific but emphasized a "strong denial defense along the first Island Chain," a strategic area where Taiwan is central.

The Congressional Counterweight on China Policy

While Trump pursued diplomacy with Beijing, Congress operated on a different track. Despite Trump's influence over Republicans, a strong bipartisan consensus remained to counter Chinese government actions and support Taiwan. This congressional activism, a consistent feature since 2018, continued unabated.

Led by Republicans and the House Select Committee on the CCP, Congress focused primarily on defending U.S. interests from Chinese challenges. By August 2025, 564 pieces of legislation mentioning China had been introduced, with 247 containing substantive provisions on issues including:

• Technology decoupling

• Rare earth supply chains

• Higher education oversight

• Strengthening U.S. commitments to Taiwan

Bipartisan Pushback on Trump's Overtures

Though some Democrats criticized Trump's tariffs and sought to open communication with Beijing—as seen in a September visit to China by a delegation led by Representative Adam Smith—this did not signal a collapse of the "Washington Consensus." In practice, bipartisanship consistently prevailed in hardening U.S. policy.

Often, Democratic criticism was that the administration's policies were not tough enough on China. For example, Democrats opposed the end of U.S. support for Voice of America and international climate change measures, arguing these moves weakened U.S. resolve.

A sharp, bipartisan rebuke came in December after Trump allowed the sale of advanced Nvidia AI chips to China. Ahead of the decision, Senate Intelligence Committee Chair Tom Cotton introduced a bill with bipartisan support to block such sales. In January, the House Foreign Affairs Committee voted 42-2 for a bill to give Congress greater control over AI chip exports to China, directly challenging White House AI czar David Sacks.

Limits of Presidential Power Emerge

Trump's tight grip on the Republican party showed its limits. He failed to convince Senate Republicans to eliminate the filibuster or end the practice allowing home-state senators to block judicial nominees.

By early 2026, congressional resistance was growing. Bipartisan majorities began to push back on several of Trump's initiatives, including a military attack in Venezuela and threats against Greenland. Seventeen House Republicans joined Democrats to extend Affordable Care Act subsidies. Furthermore, Congress passed several spending bills that explicitly rejected the president's proposed budget cuts, wording them to limit the administration's ability to make unilateral funding decisions.

These developments underscore a critical reality: a powerful, bipartisan congressional majority focused on countering China serves as a significant check on the Trump administration. This dynamic acts as a crucial brake, restricting any potential compromises with Beijing that might come at Taiwan's expense.