Economic Warfare On Iran, White House Ballroom, Bond Market Warning Signs

The U.S. has not sanctioned the government that buy Iran's oil, but that may change China's Iran's biggest customer good-it-base consequences.

I'm Sasha Fifur, that's Leyla Fattel, and this is up first from NPR News.

The Supreme Court is expected to weigh in on President Trump's ballroom construction, a lawsuit argues he needed congressional approval, Trump is framing the ballroom as part of a military complex with drone ports and bomb shelters. And the bond market is flashing a warning sign for the economy. That marketplace a big role in setting interest rates when the government has to pay more

to borrow money so does everyone else. Stay with us.

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The Trump administration is threatening crippling new economic pressures on Iran.

They want that pressure to force Iran back into negotiations over the straight of Hormuz. Treasury Secretary Scott Bessant says next week, he'll lay out what new economic pressure on Iran looks like. Diplomatic efforts to revive peace talks have completely stalled after a temporary ceasefire

was called off weeks ago, with us as NPR's Emily Fang to explain the latest good morning Emily. So the US has already, it already has so many sanctions on Iran, so much economic pressure on Iran.

“So what exactly is the president threatening beyond what's already being done?”

Well he wrote on Drew Social Media site that any country that allows institutions or businesses to provide quote any type of lifeline to Iran will itself face tremendous economic consequences. He appears here to be referring to activity like smuggling Iran and oil out or helping Iran by goods abroad, as you know, though the US already has extensive sanctions that makes a lot of international trade with Western countries and possible.

And already in June, the US took it one step further. They put secondary sanctions on entities that were helping Iran evade sanctions. So as Sasha mentioned earlier, Treasury Secretary Bessant said he's going to hold press conference on Monday to explain what this new quote, economic day as President Trump is calling. It will entail, but what is notable to me is the focus seems to be on countries and

their governments now. So not just on businesses and economic fronts. And the big question that stands out is how this might affect China. Okay, wait, how is China connected to this? So until now, the US's sanctioned entities that ship or refine oil or move money around

that allows China to buy about 80 to 90% of Iran's oil before the war. But the US has largely held off on sanctioning the governments of those entities, governments like that of China's. That might change. China has been one of the top places for money laundering and financial fronts for moving

Iranian money around. The US Treasury actually sanctioned several of this fronts in June. And China was the only country that Bessant mentioned, you know, single out this week. Here's an interview he did with CNBC yesterday. The reopening of the straight benefits China, unfortunately, they've been buying.

They were the largest consumer of Iranian oil, they were buying about 90% of it. Though when he was asked specifically of China, it might be targeted under these new economic pressures Bessant declined to answer. Interesting. Iran's economy was already struggling before the US and Israel started this war.

“How is it fairing now and will even more sanctions work?”

That is the big question, Iran's economy is struggling even more. A US blockade has cut its economy off from the rest of the world. People there cannot get goods from outside the country for the most part. But CNBC is senior fellow at the Think Tank Center for International Policy in Washington says ideological hardliners now have control of parts of Iran's government.

So the economy is not their priority.

to bear much greater economic costs to kind of secure their survival.

“Whereas for the US, it's ultimately, you know, for the average American, the average voter,”

we have much less at stake here. He notes Iran does want promises of sanctions relief. They really want the US to unfreeze tens of billions of dollars of Iranian assets abroad. But there's also widespread distress of the US and arguably laying on even more sanctions

on Iran would only increase that distress and make the case that the US will never allow

for sanctions relief on Iran. I'm Pierre Zemilifang. Thank you, Emily. Thanks, Leila. The Supreme Court is expected to weigh in on whether President Trump can continue construction

of his ballroom. A non-profit group sued the administration and appeals court ruled in the non-profits favor earlier this month and said construction needed to stop, but the court paused its order until today. And Pierre White House correspondent, Deepa Shehram, is with us now to discuss Good Morning,

Deepa. Good morning. So catch us up on what the Supreme Court is deciding on exactly.

Yeah, it's been a lot of start and stop with this, but to put it simply, last fall,

Trump knocked down the east wing of the White House to construct a 90,000 square foot ballroom. It's costing hundreds of millions of dollars and while Trump has said that taxpayers will not have to pay for any of it, the Washington Post has reported that some of the cost will fall on the public and Pierre hasn't independently confirmed that though. And so after he starts construction, a non-profit group called the National Trust for Historic

Preservation sues the Trump administration and says that Trump needs congressional approval in order to build the ballroom. The lower courts have hashed out this lawsuit for months and now the Supreme Court will decide what happens next. The Trump administration is arguing that the ballroom was needed to create a, quote, integrated

military complex that houses medical care, a drone port and bomb shelters. On the other hand, the National Trust for Historic Preservation is saying that the executive branch doesn't have the authority to transform the White House like this, even for national security purposes.

“Does the president think the court will rule in his favor?”

Yeah. So earlier this week, he said that he can't imagine that the Supreme Court is ruling against the ballroom. And he said that while he took the press out for a tour of the ongoing construction on the south lawn of the White House, this is different than the ballroom, by the way.

There's generally a lot of projects, Trump has going on and once and he really likes talking about them. But he's building a new helipad on the south lawn and when he was showing that off to reporters, he was describing the ballroom being used to host foreign dignitaries. Like China's Xi Jinping who's expected to visit the U.S. soon.

They get out of the car and they walk down this path onto that and they can have cocktails and everything outside of the White House and then they go into the ballroom. Even the military, they can use it like that and we have, the ballroom is so much a military component with the drones and the bomb shelters and everything else that we have in there.

And that pivot over firming to it as a ballroom, slash military complex and really putting the security part of this, you know, on the forefront has been something Trump started doing when the courts started weighing in. And on this construction and saying there is a possibility of this getting shut down, I will just point out though, Leila.

It's not just the courts, Trump is having to contend with here. His ballroom is really unpopular in the public eye, a poll from ABC News, Washington Post Ipsos shows that 56 percent oppose the ballroom at the same time, polling also shows

that a vast majority of Americans also think the president isn't focusing on the most important

issues. In addition to Trump's construction projects, not being popular, his economic policies aren't popular and his war with Iran isn't either. I mean, construction of the ballroom though has been going on since last October. So what happens to a not quite finished ballroom slash military complex if construction

has to stop?

“Yeah, this is kind of a logistical nightmare, right?”

Because the ballroom is already getting built, millions of dollars have already been spent, Bay Area's near the White House have been closed off for months because of the construction. So if the court says that Congress needs to come in and approve this, it's not like Congress moves at lightning speed either, right? Right.

So having an unfinished ballroom slash military complex that completely raised over the old east wing of the White House, it's complicated and the whole situation sort of speaks to Trump's decision-making process and how he treats the courts because now the Supreme Court's kind of an awkward position here. That's NPR's Deepa Shiver.

Thank you, Deepa. Thank you. It was another sell-off in financial markets. The Trump administration had tried to calm market jitters and keep the government's barwing costs in check, but investors dumped both stocks and bonds on Thursday.

NPR's Scott Horsey joins us to discuss high Scott.

Good morning.

So we don't often talk about the bond market, but it does appear to be flashing a warning

sign. What's going on? This week, the yield on government debt jumped to its highest level in almost two decades. That's the payoff that investors demand in return for lending money to government. Carl Tananbaum, whose chief economist at the asset management company, Northern Trust, says

there are three reason bond yields have been going up. One, we have a very large and growing national debt to inflation continues to be a little higher than we would like to see it. One, three, the demand for borrowing, especially the long-term borrowing, has been added to by the immense AI build-out.

Big tech companies are borrowing a lot of money to build their AI data centers and the

government has to compete with that to find lenders of its own.

The government's interest cost jumped about 15% this year to more than a trillion dollars a year. How's the Treasury Department responding? On Wednesday, the Treasury Department announced it would buy back more of its government bonds effectively refinancing some of the government's long-term debt with somewhat cheaper

short-term debt, and that move was intended to re-assure investors and tamp down those sky-high yields. Treasury Secretary Scott Beasant told CNBC, "He thinks the bond market is overreacting and there's no reason for yields to be this high."

“The underlying economy, I think, is very strong, and the only inflationary impulses that we're”

seeing are coming from the energy, which is temporary. Of course, we're almost six months into the Iran war now, and gasoline prices are still high. The Treasury Department's action did provide a little relief in the bond market, but it did not last.

Yields came down on Wednesday, but yesterday they bounced back up again. They're not as high as they were earlier in the week, but the financial markets are still jittery. What does that say about the Treasury Secretary's credibility? You know, Beasant is a former hedge fund manager, and he essentially said on CNBC, "I

know better than the market does." But the market's reactions are just investors aren't willing to take that on faith. Carl Tannenbaum says the buy-back program that was announced this week is pretty small in the scheme of things, and it only runs until just half of the midterm election. Typically, when governments attempt an intervention of this kind, they need to commit

to doing it in a very large size and for a very long time. And investors are questioning whether Treasury has that commitment. Beasant also told CNBC the government can grow its way out of that $40 trillion in debt. Certainly, economic growth would help, but right now the economy is growing at an annual rate of about 2% and we're piling up debt at a rate of nearly 6%.

So that's not a roadmap to a fiscal success.

“What does all of this mean for people who are not active investors in the bond market?”

Well, the bond market plays a big role in setting interest rates. So when the government has to pay more to borrow money, so does anyone getting a mortgage, or a car loan, or trying to bankroll a business? Mortgage rates, for example, have climbed close to 6.7%. And those high-borrowing costs are keeping a lot of would-be home buyers on the sidelines.

And Pierre Scott, Horsey, thank you, Scott. You're welcome.

And that's up first for Friday, August 21st.

I'm Leila Faldin, and I'm Sasha Fibre. Today's episode about first was edited by Rebecca Metzler, Emily Kopp, Muhammad Elbar DC, and Alice Wolfley. It was produced by Paige Waterhouse and Mia Dumas, our director is Katie Klein. We get engineering support from Carly Strange, our technical director is A.O.N. fame, and our executive producer is Jay Schaler.

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