Because he didn’t know what he was doing: US President Donald Trump underestimated what consequences his war could have.Image: keystone
The global economy is facing its fourth shock in six years – will key interest rates rise this time too?
March 15, 2026, 05:58March 15, 2026, 05:58
Before his attack on Iran, Donald Trump did not know how important the Strait of Hormuz was. The US President has repeatedly claimed that if the road were to be closed, oil from Venezuela could still be used. Venezuela produces around 20 times less oil than is shipped through the Strait of Hormuz. Economist Paul Krugman concludes:
“With every passing day it becomes clearer that the Trump administration does not know what it is actually doing in Iran.”
Now Trump is getting a lesson from Iran about the Strait of Hormuz. The whole world, including Switzerland, has to learn with him. If the war doesn’t end soon, US economist Catherine Rampell will be with her forecast keep right:
“War inflation has only just begun.”
There is the oil market, which, according to the International Energy Agency, is facing the “biggest shock in its history”. The price is currently close to $100 again. Trump tried to drive down the price. He threatened Iran and claimed that the war would soon be over – but nothing has helped so far. Iran has now hit 16 tankers and traffic on the Strait of Hormuz is more or less at a standstill.
Naturally, petrol, heating oil and kerosene become more expensive as petroleum increases. But these are just the most obvious examples. As Catherine Rampell notes, there are countless consumer products that contain petrochemicals as raw materials. This includes clothing, iPhones, sweets, dentures, dishwashing liquid, footballs, shampoo, toothpaste, lipstick, plastic toys, garbage bags, umbrellas, tires. And, and, and. All in all, there are over 6,000 everyday products.
According to a US analyst, such products will not become more expensive immediately, but they will over time if the war lasts another month or two. And petroleum is included in the prices of countless products through another channel: because it is still needed to transport many goods by truck.
Up to 50 percent of the harvests could fail
But oil isn’t the only global market being disrupted by the Iranian ban. Two thirds of all shipswhich pass through the Strait of Hormuz every day, are carrying crude oil, refined oil or liquefied natural gas. The remaining third transports coal, iron, aluminum, grain or tropical fruits from South Asia – but above all a lot of fertilizer.
About a third of the fertilizer transported by sea worldwide is transported via the Strait of Hormuz. The states in the Persian Gulf supply around 30 and almost 50 percent of the global supply of two important plant nutrients. With the ban, this offer will no longer apply. The Prices of some fertilizers have therefore already increased by 50 percent. This in turn has already driven up the prices of many types of grain, such as corn and wheat.
For some farmers, “the worst crisis of all time” could just be beginning, according to the Bloomberg news agency. Not only are fertilizers particularly expensive now, but the prices of some types of corn are currently low. In relation to the price of grain, fertilizer is therefore more expensive than ever. Trump also chose the stupidest time for his attack: shortly before spring sowing, when fertilizer is needed most.
“We should not underestimate the consequences for global food production,” warns the head of a large fertilizer manufacturer to the “Financial Times». If the fertilizer does not reach the fields, the first harvest could be up to 50 percent lower. A food systems expert predicts that if the lockdown continues, consumers will have to pay higher prices for bread, eggs or chicken within six months at the latest.
Four shocks in six years
The lockdown is part of a series of shocks. Since 2020, the world has experienced Corona, Russia’s attack on Ukraine, Trump’s chaotic customs policy and now Trump’s haphazard Iran war. That’s four shocks in just six years. As in previous shocks, it remains to be seen how strongly prices react in rich countries like Switzerland.
If inflation rises, central banks will have to decide: Is it just a temporary shock? Then they can sit it out. Or is there a risk of permanently higher inflation? Then the central banks would have to raise their key interest rates.
The same game would start in Switzerland as after the Corona shock and Russia’s attack on Ukraine. If interest rates rise, interest rates on mortgages rise. If these increase, the reference interest rate for rents rises – and tenants in existing tenancies pay more. After all, higher interest rates tend to be bad for stock prices. Next week the Swiss National Bank will decide again on its key interest rates. The public will find out for the first time how they plan to deal with wartime inflation that may only be beginning. (aargauerzeitung.ch)