Summary of Trump's Narrative Shift on Iran and Spain
On July 8, 2026, President Donald Trump exhibited a significant shift in his rhetoric regarding Iran and Spain within a single day, impacting market sentiment and international relations.
Iran: From Hostility to Desire for a Deal
Initially, Trump declared that the deal with Iran was "dead" following attacks on merchant ships in the Strait of Hormuz, leading to a drop in US index futures and a spike in oil prices. The S&P 500 index fell by 0.28% to 7,482.71 points. However, just hours later, Trump reversed his stance, claiming that Iran was eager for a deal, stating they had "just phoned" and "want a deal very, very badly." This sudden change in tone caused a rebound in market sentiment, with futures contracts on US indices turning positive.
When questioned about Iran's aggressive actions while seeking a deal, Trump attributed it to their unpredictable nature, remarking, "Because they’re a bit mad." This pattern of fluctuating rhetoric has been observed since March, with market reactions varying sharply based on Trump's statements regarding Iran.
Spain: From 'Lost Cause' to 'Generous Partner'
Trump's narrative also shifted regarding Spain during the NATO summit in Ankara. Initially, he labeled Spain a "lost cause" and a "completely hopeless" partner due to its refusal to meet NATO's defense spending target of 5% of GDP. He even ordered the suspension of all trade with Spain, including visas. However, on his return flight, Trump claimed that Spain had "come round completely" and had been "very generous," acknowledging their compliance with various payment requests. Spanish Prime Minister Pedro Sánchez described their conversation as "very cordial," focusing more on sports than military spending.
Potential Embargo on Spain
Despite Trump's statements, there are limited legal avenues for imposing an embargo on Spain. The US Treasury and Commerce Departments are preparing a list of Spanish products that could be subject to selective embargo, but unilateral action is complicated by EU trade rules requiring uniform treatment of all EU countries.
Market Reactions
Following these developments, Spanish shares rose by 0.8%, while oil prices experienced a decline of over 2%. The market's performance reflects the ongoing volatility and sensitivity to Trump's communications regarding international relations.