Northern Trust’s $1.4 trillion asset management arm says the AI boom is “massively disinflationary.” The evidence is building — but so are the near-term headwinds. Here is what the bulls are getting right, what they are glossing over, and what every central banker should be thinking about this week.

Analysis · 2,150 words · Cites: Northern Trust, IMF WEO April 2026, BIS Working Papers, OECD

There is a sentence making the rounds in macro circles this morning that deserves more than a tweet. Northern Trust Asset Management — custodian of $1.4 trillion in client assets — told the Financial Times that the AI boom is poised to be “massively disinflationary.” Two words, twelve letters, and an argument that, if it proves correct, will reshape monetary policy for the rest of this decade. If it proves wrong, it will look like the most expensive case of group-think in asset management history.

The claim is bold, but it is not baseless. Across its 2026 Capital Market Assumptions, Northern Trust has laid the groundwork: nearly 40 percent of jobs worldwide — and 60 percent in advanced economies — are now exposed to AI, signalling what the firm calls “a major shift” in productivity and labor market dynamics. Add to that the IMF’s own January 2026 estimate that rapid AI adoption could lift global growth by as much as 0.3 percentage points this year alone, and up to 0.8 percentage points annually in the medium term, and suddenly “massively disinflationary” sounds less like a marketing line and more like a macroeconomic thesis worth taking seriously.

But serious theses deserve serious scrutiny. And when you peel back the optimism, you find a story with a considerably more complicated second act.

“AI today is still in its early innings. It is reshaping how we operate. It is reshaping how we work. Yet at the same time, we know there are going to be a number of missteps.” — Northern Trust Asset Management, February 2026

The disinflationary logic — and why it is compelling

The core argument runs as follows. AI raises the productive capacity of every worker, firm, and economy that adopts it. More output from the same inputs means falling unit costs. Falling unit costs mean downward pressure on prices. In a world still wrestling with inflation — the IMF’s April 2026 World Economic Outlook projects global headline inflation at 4.4 percent this year, elevated partly by a new Middle East conflict — that kind of structural supply-side boost could not arrive at a better moment.

The historical analogy is not perfect, but it is instructive. The internet and personal computing drove a productivity renaissance through the 1990s that helped the US run a decade of growth with unusually low inflation. The difference this time, optimists argue, is both speed and scope. Generative AI is being deployed across sectors — finance, law, medicine, logistics, software — simultaneously, rather than trickling through the economy over fifteen years. The IMF’s own research noted that investment in information-processing equipment and software grew 16.5 percent year-on-year in the third quarter of 2025 in the United States alone. That is not a technology cycle. That is a structural reorientation.

At the firm level, the mechanism is equally legible. AI-assisted coding reduces software development costs. AI-powered customer service reduces headcount requirements per unit of output. AI-accelerated drug discovery compresses R&D timelines. Each of these reduces costs for producers, and in competitive markets, cost reductions eventually become price reductions for consumers. The BIS, in its 2026 working paper on AI adoption among European firms, found measurable productivity gains at companies with higher AI adoption rates — gains that, if broad-based, translate directly into disinflationary pressure.

The uncomfortable counterarguments

Now for the cold water. The hyperscalers — Alphabet, Microsoft, Amazon, Meta — are expected to spend upwards of $600 billion on data center capital expenditure in 2026 alone, according to Northern Trust’s own analysis. That is $600 billion of demand competing for semiconductors, specialised labor, land, electricity infrastructure, and cooling systems. In the near term, this is not disinflationary. It is, by any honest accounting, inflationary. It bids up the price of every input that AI infrastructure requires.

Energy is the most acute example. Northern Trust’s own economists have noted that data centers are expected to account for 20 percent of the increase in global electricity usage through 2030. The IMF’s recent research put it plainly: energy bottlenecks “could delay AI diffusion, anchor a higher level of core inflation, and generate local pricing pressures” in grid-constrained regions. This is not a theoretical risk. It is a live constraint in the US, the UK, Ireland, Singapore, and across northern Europe, where grid capacity has become a hard ceiling on data center expansion.

There is also the measurement problem — and it is a serious one. As the IMF’s own Finance & Development noted in its March 2026 issue, GDP accounting simultaneously overstates AI’s immediate contribution (by counting massive capital outlays as output) while understating its broader economic impact (by missing productivity spillovers that do not show up in standard national accounts). This is precisely the statistical paradox that masked the early productivity gains of the 1990s IT revolution — and it cuts in both directions for policymakers. If AI is quietly raising potential output, the economy may be running cooler than headline data implies. If the infrastructure surge is instead stoking a new floor for energy and construction costs, central banks may be tightening into a real supply shock.

The IMF’s chief economist Pierre-Olivier Gourinchas put the dilemma with characteristic precision: the AI boom could lift global growth, but it also “poses risks for heightened inflation if it continues at its breakneck pace.” That is the paradox in miniature — the same technology that promises to lower prices over time is currently consuming enormous resources to build itself.

The geopolitical dimension: who wins, who lags, and who is locked out

The disinflationary thesis is not uniformly distributed across the global economy, and this is where the Northern Trust framing risks glossing over structural inequality. Advanced economies — the US, Japan, Australia, South Korea — are positioned to capture the productivity upside first. Their firms are adopting, their labor markets are adapting, and their capital markets are pricing in the gains. Northern Trust’s own forecasts identify the US, Japan, and Australia as likely leaders in equity returns over the next decade, precisely because of AI-driven productivity.

Europe sits in a more ambiguous position. The continent is not at the forefront of AI model development, and Northern Trust acknowledges it explicitly in its CMA 2026. The region offers a healthy dividend yield and attractive valuations — but if AI productivity is the driver of the next decade’s returns, Europe’s relative lag in AI infrastructure and frontier model development is a structural disadvantage, not a cyclical one. The ECB faces its own version of the monetary policy puzzle: if AI-driven disinflation arrives later and slower in Europe than in the US, it changes the rate path, the currency dynamics, and the comparative fiscal math.

Emerging markets face the starkest challenge. The IMF’s analysis of AI in developing economies is clear: AI preparedness — digital infrastructure, human capital, institutional capacity — is the binding constraint on whether productivity gains materialize or get captured entirely by technology importers. Many emerging economies are primarily consumers of AI built elsewhere. The disinflationary benefits they receive are mediated through imports; the inflationary effects of AI-driven energy demand and semiconductor scarcity are borne locally. The net result, without deliberate policy intervention, is a widening productivity gap rather than a convergence story.

China deserves a separate paragraph. Its AI investment is substantial and accelerating, even under the constraints of US semiconductor export controls. The China-US AI race is not merely a geopolitical contest — it is a race to determine which economy gets to define and monetize the next general-purpose technology. Beijing’s capacity to deploy AI at scale across manufacturing, logistics, and services could generate its own disinflationary dynamic, although its ability to export that technology — and the disinflation it carries — is constrained by the very geopolitical tensions that are simultaneously driving energy and defence inflation.

What central banks should actually do

The honest answer is: proceed carefully, communicate transparently, and resist the temptation to read AI’s structural effect through the noise of its near-term capex cycle. The IMF’s April 2026 World Economic Outlook makes the right call when it urges central banks to guard against “prolonged supply shocks destabilising inflation expectations” while reserving the right to “look through negative supply shocks” where inflation expectations remain anchored.

That is the narrow path. If AI is genuinely raising potential output, then central banks that tighten aggressively in response to near-term energy and infrastructure inflation are making a classic policy error: fighting tomorrow’s economy with yesterday’s models. The 1990s analogy is instructive again — the Federal Reserve’s willingness to allow growth to run above conventional estimates of potential, on the grounds that productivity was accelerating, helped produce the longest peacetime expansion in American history.

But the reverse error is equally dangerous. If the AI productivity jackpot takes longer to arrive than Northern Trust and its peers anticipate — and Daron Acemoglu’s careful 2025 work in Economic Policy gives serious reason for that caution — then central banks that ease prematurely, trusting in a disinflationary future that is still several years away, risk entrenching the very inflation they spent the early 2020s battling back.

The IMF is right to treat AI as what it called in its April 2026 research note “a macro-critical transition rather than a standard technology shock.” Human decisions — by managers, workers, regulators, and investors — will shape the pace of adoption, the distribution of gains, and the political sustainability of the disruption. Those decisions are not made yet. Which means the data, for now, is genuinely ambiguous.

The verdict: right thesis, wrong timeline

Northern Trust is probably correct that AI will be massively disinflationary. The logic is sound, the historical analogies are supportive, and the scale of investment being made is simply too large to yield no productivity dividend. The question is not whether, but when — and the “when” matters enormously for portfolio construction, monetary policy, and fiscal planning.

The near-term picture, stripped of AI optimism, is one of elevated global inflation shaped by geopolitical conflict, persistent services price stickiness, and a capex boom that is consuming rather than producing cheap goods. The medium-term picture, contingent on adoption rates and diffusion across the global economy, is one where AI-driven productivity could deliver a genuine and sustained disinflationary impulse — the kind that would allow central banks to run looser for longer, equity multiples to expand sustainably, and real wages to recover.

The investor who misidentifies the timeline — and treats the medium-term story as immediate reality — will find themselves long duration in a world where rates stay higher than expected, and long AI infrastructure capex in a world where the ROI question remains, as Northern Trust itself acknowledged in February, one of “many more questions than answers.”

The honest macro position, as of April 2026, is this: Northern Trust is pointing in the right direction. But they may be holding the map upside down with respect to the calendar. For investors, policymakers, and strategists, the discipline required is not deciding whether AI will be disinflationary — it will — but calibrating, with intellectual humility, exactly how long the world will have to wait before the price deflator actually arrives.

In the hushed corridors of Islamabad’s Q-Block this April 2026, a familiar but increasingly dangerous fiscal paradox is playing out. Pakistan has, at great political cost, wrestled its macroeconomic indicators back from the precipice. Currency volatility has subsided, and the structural benchmarks of the International Monetary Fund (IMF) are largely being met. Yet, beneath the surface of this stabilization lies a deeply punitive revenue model—one that threatens to suffocate the very engine of export-led growth it intends to fuel.

This is the stark reality underscoring the OICCI tax recommendations 2026, recently presented to Minister of State for Finance, Bilal Azhar Kayani. In a critical high-level meeting—joined virtually by the Director General of the Tax Policy Office, Dr. Najeeb Memon—the Overseas Investors Chamber of Commerce and Industry (OICCI) laid bare the math of Pakistan’s uncompetitive corporate landscape.

Their message was unequivocal: expand tax net Pakistan, or watch foreign direct investment (FDI) route itself to Hanoi, Dhaka, and Mumbai. The chamber’s roadmap is not merely a corporate wishlist; it is the most pragmatic, investment-friendly blueprint Islamabad has seen in a decade.

The Anatomy of a Squeeze: The Laffer Curve’s Vengeance

To understand why OICCI urges Minister Kayani tax burden existing taxpayers must be reduced, one need only look at the sheer weight of the current fiscal extraction. Currently, the headline corporate tax rate sits at a seemingly manageable 29%. However, when layered with the regressive Super Tax (up to 10%), the Workers Welfare Fund (WWF) at 2%, and the Workers Profit Participation Fund (WPPF) at 5%, the effective corporate tax rate aggressively scales to an eye-watering 46%.

This is the Laffer Curve in full, vindictive effect. At 46%, taxation ceases to be a revenue-generating mechanism and becomes a penalty for formal documentation. Compliant multinationals and domestic conglomerates are essentially subsidizing the sprawling, untaxed informal economy.

As noted in recent analyses by The Financial Times on emerging market capital flows, capital is ruthlessly unsentimental; it goes where it is welcomed and stays where it is well-treated. By clinging to the Super Tax, Islamabad is signaling that commercial success in Pakistan will be met with ad-hoc penalization. This is why the super tax abolition OICCI budget 2026 proposal is not a plea for leniency, but a baseline requirement for economic survival.

The OICCI Blueprint: Pragmatism Over Populism

During the April 2026 session, OICCI Secretary General M. Abdul Aleem cut to the heart of the issue, advocating for rigorous documentation and digitization. He noted that fiscal health requires “all segments contributing proportionately” to the national exchequer.

The chamber’s meticulously phased roadmap for FY2026-27 offers a graceful exit from this high-tax trap. The core proposals demand urgent legislative attention:

• A Phased Corporate Tax Cut: A reduction of the headline corporate tax rate from 29% to 28% in FY2026–27, cascading down to a Pakistan corporate tax cut to 25% 2026-27 over a three-year horizon.
• Abolition of the Super Tax: A gradual phasing out of the Super Tax to bring effective rates back into the realm of regional sanity.
• Rationalizing Personal Taxation: The immediate abolition of the 10% surcharge on high earners and capping the personal income tax rate at a maximum of 25%, a vital move to stem the accelerating brain drain of top-tier talent.
• Sales Tax Rationalization: A phased reduction of the general sales tax (GST) from its inflationary peak of 18%, stepping down to 17%, and eventually stabilizing at 15%.
• Fixing Friction Points: An urgent overhaul of the withholding tax (WHT) regime, a review of the draconian minimum and alternate minimum taxes, and the resolution of perennial refund delays exacerbated by poor federal-provincial coordination.

Regional Reality Check: Capital Flies to Competitors

To contextualize the severity of Pakistan’s position, we must look across the borders. The global narrative of “friend-shoring” and supply chain diversification is entirely bypassing Pakistan because of its fiscal hostility. When an American or European multinational evaluates South Asia for a manufacturing hub, the tax differential is often the deciding metric.

Data reflects projected standard formal sector rates for 2026.

As the table illustrates, a foreign entity operating in Karachi or Lahore surrenders nearly half its profits to the state, before even accounting for double-digit inflation, exorbitant energy tariffs, and high borrowing costs. Without Pakistan tax net expansion foreign investment will remain anemic. You cannot build a 21st-century export powerhouse on a fiscal chassis that penalizes your most productive corporate citizens.

Untangling the Financial Arteries: Banking Sector Constraints

The corporate squeeze is perhaps most vividly illustrated within the financial system. The OICCI banking sector tax constraints 2026 agenda highlights a critical vulnerability. Banks in Pakistan are subjected to a dizzying array of discriminatory taxes, often treated as the government’s lender of first resort and its most easily accessible cash cow.

When banks are taxed punitively—often at effective rates crossing 50%—their capacity and willingness to extend credit to the private sector shrink. They retreat into the safety of sovereign paper, crowding out the private borrowing necessary for industrial expansion. Minister Kayani and Dr. Memon must recognize that unleashing the banking sector from these constraints is prerequisite to stimulating the very export sectors the government relies upon for dollar liquidity.

Beyond the Formal Sector: The Urgent Need for Tax Net Expansion

The elephant in Q-Block has always been the undocumented economy. Successive governments have found it politically expedient to extract more from the 3 million active taxpayers rather than confront the sacred cows of Pakistani politics: agriculture, retail, and real estate.

However, as highlighted by the World Bank’s Public Expenditure Review, Pakistan’s low tax-to-GDP paradox can only be resolved by broadening the base. The OICCI’s demand to expand the tax net is fundamentally about horizontal equity. Trillions of rupees circulate in wholesale markets, speculative real estate plots, and massive agricultural tracts with near-zero tax yield.

Integrating these sectors via aggressive digitization, point-of-sale mapping, and property valuation overhauls is not optional; it is structural triage. If the tax burden is dispersed horizontally across these vast, untaxed plains, the vertical pressure on multinationals and salaried professionals can finally be released.

Navigating the IMF Reality: From Stabilization to Export-Led Growth

The immediate pushback from Islamabad’s fiscal bureaucrats is entirely predictable: “The IMF will not allow revenue-sacrificing measures.” This is a fundamental misreading of modern macroeconomic consensus. The IMF’s current Extended Fund Facility (EFF) framework prioritizes a sustainable tax-to-GDP ratio, not mutually assured economic destruction via over-taxation.

Executing IMF compliant tax reforms Pakistan export growth requires a nuanced negotiation posture from the Finance Ministry. By simultaneously presenting a robust, verifiable plan to tax retail and real estate, Islamabad can secure the fiscal space necessary to implement the OICCI’s proposed corporate tax cuts. The IMF is highly receptive to revenue-neutral structural shifts that shift the burden from investment and production to consumption and speculative wealth.

It requires political capital to tax a wealthy landowner or a prominent wholesaler, but it is precisely this political capital that the current administration must expend if it wishes to survive beyond the current IMF lifeline. As global economic observers at The Economist have consistently pointed out, economies do not shrink their way to prosperity. They grow out of debt through competitive private enterprise.

A Make-or-Break Moment for Pakistan’s Economy

We have reached a critical juncture in Pakistan’s economic trajectory. The stabilization achieved over the last two years was a necessary, painful chemotherapy. But you cannot keep a patient on chemotherapy indefinitely; eventually, you must nourish them back to vitality.

The corporate sector has bled enough. The arbitrary imposition of super taxes, the stifling of the banking sector, and the delayed processing of legitimate refunds have eroded trust between the state and its most reliable revenue generators. The proposals laid out by Abdul Aleem and the OICCI represent a pragmatic olive branch to the government—a data-backed roadmap to restoring investor confidence.

For Islamabad, the choice heading into the FY2026-27 budget is existential. They can continue the lazy, regressive path of milking the formal sector dry, ultimately driving capital across the border and talent across the oceans. Or, they can undertake the difficult, necessary work of digitization, documentation, and equitable taxation.

If Kayani and the Finance Ministry listen, Pakistan can finally move from tax collector to growth enabler.

In the high-stakes theater of modern geopolitics, the final miles of a war are almost always the most treacherous. When US President Donald Trump took to Fox News this week to confidently declare that the six-week US-Israel war against Iran is “very close to over,” markets exhaled. Global equities flirted with record highs, and Brent crude oil—the geopolitical thermometer of the Middle East—slipped mercifully below the $100-a-barrel threshold.

Yet, as the rhetoric in Washington pivots toward peacemaking, the view from the bridge of any commercial vessel navigating the Arabian Sea is distinctly less rosy.

Within hours of Trump’s optimistic broadcast, the operational headquarters of the Iranian armed forces issued a chilling rejoinder. If the United States Central Command (CENTCOM) continues its naval blockade of Iranian ports, Tehran warned, it will not simply choke the Strait of Hormuz; it will aggressively expand its theater of disruption to the Persian Gulf, the Sea of Oman, and the critical arteries of the Red Sea.

As diplomatic backchannels hum in Islamabad, we are left with a jarring cognitive dissonance. Trump says war very close to end, but the escalating Iran shipping threat suggests that the Islamic Republic is preparing for a sprawling, asymmetric maritime insurgency. To understand how this ends, one must strip away the political bravado and examine the cold, mathematical reality of blockades, oil markets, and the shifting calculus of global power.

The Anatomy of the CENTCOM Blockade: A High-Stakes Gamble

To force Tehran’s hand at the negotiating table, the Trump administration has deployed an aggressive naval doctrine. Following the collapse of weekend peace talks spearheaded by Vice President JD Vance in Pakistan, the US military initiated a targeted blockade on all vessels entering or exiting Iranian ports.

The early tactical results are undeniable. In its first 48 hours, CENTCOM reported a zero-penetration rate, successfully forcing nine commercial vessels to turn back toward Iranian coastal waters. It is a muscular display of maritime supremacy, designed to strip Tehran of its primary economic lifeline and its most potent point of leverage: the extortion of global shipping.

Prior to the blockade, Iran had effectively privatized the Strait of Hormuz—the waterway through which nearly a fifth of global oil and gas supplies flow. Tehran had barred non-Iranian vessels from passing without its explicit authorization, effectively transforming the strait into a toll road, reportedly demanding up to $2 million per transit.

By choking off Iranian ports but permitting passage to US Gulf allies, the Trump administration is executing a classic pressure campaign. As Max Boot notes in the Council on Foreign Relations, the strategy is a bet that Iran will buckle under profound economic asphyxiation before a sustained global energy crisis forces the United States to blink. But blockades are inherently escalatory. They invite retaliation not on the battlefield, but in the vulnerable, interconnected veins of global commerce.

Tehran’s Counter-Move: Expanding the Shipping Threat

Iran’s response to the blockade reveals a profound understanding of asymmetric warfare. Instead of directly challenging the overwhelming conventional might of the US Navy in the Strait of Hormuz, Iranian military commander Ali Abdollahi signaled a horizontal escalation.

By threatening commercial vessels in the wider Persian Gulf, the Sea of Oman, and the Red Sea, Iran is leveraging the inherent vulnerability of the global supply chain. The Iran Red Sea shipping threat 2026 is not merely a tactical bluff; it is a strategic warning that Tehran can inflict catastrophic economic pain far beyond its immediate territorial waters.

This strategy forces the US military into a defensive crouch over thousands of miles of ocean. The US Navy, while formidable, cannot indefinitely escort every commercial tanker from the Suez Canal to the Arabian Sea. Iran knows that it only takes a handful of successful drone or missile strikes on civilian tankers—or even the credible threat of such strikes—to send maritime insurance premiums into the stratosphere, functionally closing these waterways to commercial traffic.

President Trump has countered with his trademark maximalist rhetoric, threatening to turn Tuesday into “Power Plant Day, and Bridge Day, all wrapped up in one” if Iran does not yield. He has also warned that any vessel paying an Iranian toll will be intercepted by the US Navy and denied safe passage on the high seas. This brinkmanship creates a precarious binary: either Tehran capitulates, or the Middle East plunges into an infrastructure-decimating war of attrition.

Oil, Midterms, and Markets: The Economics of Peacemaking

At the heart of Trump’s optimism—and his urgency—is the American domestic economy. The US blockade Hormuz oil prices equation is the single most volatile variable in the lead-up to the US midterm elections.

Despite the blockade and the looming Iran shipping threat, energy markets have displayed a surprising, albeit fragile, resilience. Benchmark prices dropping below $100 a barrel on Tuesday reflect Wall Street’s desperate desire to believe Trump’s assertion that “Gasoline is coming down very soon and very big.”

But this market optimism is brittle. Over 100 tankers have transited the strait since the US and Israel launched the war on February 28, largely carrying Iranian oil bound for China and India. Up until the recent blockade, the US had quietly tolerated these exports to prevent a catastrophic global supply shock. By abruptly severing this flow, the administration is playing Russian roulette with global inflation.

As the Financial Times routinely observes, oil markets price in risk, not rhetoric. If Iran makes good on its threat to widen the maritime conflict into the Red Sea, the sudden spike in crude could derail the US economic recovery, wiping out the stock market’s recent gains and dealing a severe blow to the Republican party’s midterm prospects. Trump’s push to declare the Trump Iran ceasefire 2026 a victory is as much a macroeconomic imperative as it is a geopolitical objective.

The Beijing Factor: Xi Jinping’s Calculated Distance

A fascinating subplot to this crisis is the role of China. Trump recently disclosed that he exchanged letters with Chinese President Xi Jinping, urging Beijing not to supply weapons to Iran. According to Trump, Xi “essentially” agreed.

If true, this represents a significant, pragmatic calculus by the Chinese Communist Party. China is the primary consumer of Iranian crude. A prolonged war that permanently destabilizes the Persian Gulf is antithetical to Beijing’s energy security needs. While China routinely challenges US hegemony, it has little appetite for underwriting a suicidal Iranian confrontation that sends oil past $130 a barrel.

Furthermore, Trump claims that China is “happy” he is seeking to permanently secure the Strait of Hormuz. While Beijing will never publicly endorse a US military blockade, the silent acquiescence of the global superpower suggests that Iran may be increasingly isolated. Without a reliable pipeline of advanced Chinese weaponry, Tehran’s ability to sustain a prolonged, multi-front naval conflict is severely diminished.

The Islamabad Backchannel: Can Diplomacy Survive?

Despite the apocalyptic rhetoric and the movement of thousands of additional US troops to the Middle East, the diplomatic machinery has not entirely stalled. The Islamabad peace talks Iran channel remains the vital pulse of this conflict.

The weekend collapse of in-person negotiations in Pakistan was a setback, but the fact that both US and Iranian officials—including Iranian President Masoud Pezeshkian, who recently stated Tehran is “seeking dialogue, not war”—are leaving the door open for talks within the “next two days” is telling.

In diplomacy, a collapsed talk is often just a prelude to the real negotiation. The US blockade was the stick; Trump’s buoyant rhetoric on Fox News is the carrot. The Iranian regime, battered by weeks of US-Israeli airstrikes that failed to topple the government but heavily degraded its infrastructure, must now decide if the cost of retaining control over the Strait of Hormuz is worth the potential destruction of its power grids and water treatment facilities.

Iranian Foreign Ministry spokesman Esmail Baqaei’s acknowledgment of ongoing indirect dialogue indicates that pragmatism may yet prevail. However, the sticking point remains Iran’s nuclear ambitions and its desire to extract sovereign tolls from the Strait—conditions that Israel and the US view as absolute non-starters.

The Geopolitical Fallout: NATO, the Vatican, and an Isolated America

While Trump orchestrates this high-wire act, the geopolitical collateral damage is mounting. The unilateral nature of the US-Israel campaign has driven a historic wedge between Washington and its traditional allies.

UK Prime Minister Keir Starmer’s explicit refusal to support the naval blockade, stating he will not be “dragged into the war,” highlights the profound isolation of the current US strategy. European capitals, still weary from the economic scars of the Ukraine conflict, are terrified by the prospect of a closed Strait of Hormuz.

Even more unusually, the conflict has sparked a bitter, public feud between President Trump and Pope Leo, who has aggressively called for an immediate end to the war. Trump’s retaliatory posts on Truth Social against the Vatican underscore the deeply polarizing nature of this conflict on the global stage. As Foreign Affairs analysts might note, the United States is winning the tactical military battles but risks losing the broader strategic narrative, alienating the very coalition required to enforce a long-term containment of Iran.

Conclusion: The Peril of Premature Victory

When Trump says war very close to end, he is expressing a desired political reality, not a guaranteed outcome. The current landscape—a two-week ceasefire ticking down, a watertight US naval blockade, and a furious Iran threatening to ignite the Red Sea—resembles a powder keg searching for a spark.

The strategic brilliance of Trump’s approach lies in its unpredictability. By simultaneously threatening catastrophic military strikes on civilian infrastructure while floating the imminent promise of peace talks in Islamabad, he has forced Tehran into a state of strategic paralysis.

But this is a dangerous game. The Iran shipping threat is real, and the Islamic Revolutionary Guard Corps (IRGC) has a long history of viewing compromise as capitulation. If US naval forces physically board Iranian vessels, or if a rogue Iranian drone strikes a Western tanker in the Red Sea, the fragile ceasefire will shatter instantly.

We are indeed “close to the end” of this specific phase of the crisis. But whether that end arrives via a historic diplomatic breakthrough in Pakistan or a devastating regional conflagration in the waters of the Middle East remains entirely—and terrifyingly—unwritten. For global markets, diplomats, and military commanders alike, the next 48 hours will define the geopolitical trajectory of the decade.