What We’re Watching: US weighs Iran hit, Trump nominates Powell’s successor, Chinese firm can’t operate Panama Canal

Are US strikes on Iran imminent?

US President Donald Trump continued to threaten strikes on Iran, saying Thursday they must do “two things” to avoid a strike: end their nuclear ambitions and stop killing protesters. His message comes as the US is building up its military presence in the Gulf (he made a similar move in the Caribbean ahead of the Jan. 3 strikes against Venezuela). One possible option for a strike involves hitting security forces and regime leaders with the aim of reigniting protests and subverting the Islamic Republic. The mere threat of a strike has prompted oil prices to jump this week. Saudi and Israeli defense officials are reportedly in Washington today to discuss potential attacks with the Trump administration, although each side has different motives: the Israelis want to share intelligence on possible targets in Iran, whereas Riyadh seeks a diplomatic solution over fears that a hit could spark a regional war. Meanwhile, Iran’s foreign minister said today Tehran is open to nuclear talks if Trump drops his threats.

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For Powell’s successor, Trump goes with a safe pair of hands

Trump nominated former Federal Reserve Governor Kevin Warsh to be the next Fed chair when Jerome Powell’s second four-year term ends in May. Warsh is an “orthodox” pick, according to Rob Kahn, Eurasia Group’s managing director of Global Macro. During his career, he had developed a reputation as an inflation “hawk” – that is, he was averse to lowering rates over fears it would raise prices. He has changed his tune more recently, encouraging the Fed to lower rates in line with Trump’s desires. Even so, the dollar rose on the news of Warsh’s nomination, as markets believe he is less likely to be pressured by Trump into lowering rates.

Panama’s top court just handed Washington a strategic win

Panama’s Supreme Court delivered a ruling Thursday that advances US efforts to limit Chinese influence over the Panama Canal, declaring it unconstitutional for a subsidiary of a Hong Kong-based company to operate nearby ports. The company, CK Hutchison, is not directly owned by China, but Beijing has tightened political control over Hong Kong in recent years. President José Raúl Mulino said canal operations will continue uninterrupted, but the decision carries geopolitical ripples. Washington has warned that Chinese-linked control of infrastructure in Latin America poses security risks, while Beijing condemned the ruling as coercive and politically driven. Hong Kong authorities urged Panama to honor contractual commitments, warning that the dispute could chill foreign investment and intensify US–China competition over the trade chokepoint, which handles almost 6% of global maritime trade each year.