On June 26, less than two weeks after the US and Iran signed the Islamabad Memorandum of Understanding, the US military struck Iran after President Donald Trump accused the Islamic Republic of violating a 60-day ceasefire by launching drone attacks on ships in the Strait of Hormuz. Iran fired back, and the ceasefire that was supposed to open a window toward a permanent deal was, briefly, shattered. The weekend’s exchange of fire tested the fragile US-Iran agreement; Trump threatened more military action if Iranian strikes continued, while Iran warned ceasefire violations would “result in the complete halt of all diplomatic processes.” Both sides eventually stood down, but the episode illustrated a hard truth about where this conflict has left American power: militarily effective in narrow bursts, strategically uncertain over the longer term.
The four-month war against Iran produced real military results. US and Israeli strikes degraded Iran’s nuclear program, decimated its naval assets, and damaged its air defense and ballistic missile infrastructure significantly. Those achievements matter. They are not the whole picture.
The Ceasefire Nobody Agreed On
No text reflecting mutual agreement on ceasefire terms was released, and the two sides’ differing public statements on the ceasefire presaged subsequent and ongoing points of tension. That ambiguity has been exploited repeatedly by both parties. Since its declaration, the ceasefire has been violated by both sides numerous times. Each violation produces its own cycle of retaliation, threat, and partial stand-down — a pattern that looks less like de-escalation and more like managed low-intensity conflict with a 60-day clock.
The financial dimensions of the eventual settlement are equally contested. Iran has described the expected compensation payments as reparations for damage caused by US bombing — a framing that sits poorly in Washington but reveals how Tehran intends to sell the agreement domestically. Trump denied that any $300 billion government fund to Iran was part of the deal and called it fake news, while saying that if Israel was provoked by Iran he would back further Israeli attacks. The gap between what each side says the deal contains and what it actually commits to is wide enough to drive another conflict through.
Maritime traffic through the Strait has remained well below pre-conflict levels as Iran has sought to formalize its de facto control over the strait, including a tiered system of payments that Iran reportedly has charged some vessels. The Strait of Hormuz, through which roughly one-fifth of global oil flows, has not returned to anything resembling normal operations. The economic disruption that started with the first shots continues compounding.
What Beijing Is Watching
The conflict’s most consequential audience may not be in Tehran, Washington, or the Gulf capitals. The United States and Israel fought Iran, and China won. America’s setback with Iran has widened a lane for China to assert greater influence and leadership on the world stage.
That assessment, from the Brookings Institution, reflects a broader analytical consensus that has emerged since the ceasefire. The Iran war has provided China with a powerful propaganda tool to cast doubt on Washington’s capacity to uphold commitments to Taiwan and other Asian allies. America has structural advantages vis-à-vis China, but it cannot translate them into effective global leadership without strategic discipline.
It is clear that the United States’ defense posture in the Indo-Pacific is being strained by competing operational demands. The conflict has seen the US burn through billions of dollars in missiles, redeploy a Marine Expeditionary Unit from Japan, and shift 48 THAAD interceptors off the Korean Peninsula. Those interceptors are not easily or quickly replaced. Replenishing the munitions inventory will certainly take time and money, as will the redeployment of weapons systems back to South Korea.
For Taiwan, the most immediate challenge comes from how China interprets US actions in Iran. If Beijing concludes that diminishing military resources or domestic pressures would limit the US’ ability to wage a sustained conflict in the Indo-Pacific, it may reassess the risks of applying coercive pressure on Taiwan. The US intelligence community’s 2026 Annual Threat Assessment judged that Chinese leaders “do not currently plan to execute an invasion of Taiwan in 2027” but are “probably seeking to set the conditions for eventual unification with Taiwan short of conflict.”
China’s strategy for Taiwan relies upon creating a sense of inevitability. To foster this feeling, China’s propaganda efforts in Taiwan will dial up narratives about a worn-out America lacking the appetite for a struggle with China. Chinese officials will urge Taiwan’s leaders to adjust to America’s decline by becoming more positive about cross-strait collaboration.
The Chokepoint Problem the War Exposed
The Hormuz crisis revealed a structural vulnerability that extends well beyond Iran. Iran’s disruption of commercial shipping has reduced transit through the Strait of Hormuz, a crucial conduit for energy resources and other commodities to reach global markets. The lesson is not specific to Iran — it applies to every strategic waterway where US commitments are tested by an adversary with asymmetric capabilities.
The current crisis in the Strait of Hormuz has been watched closely in Taiwan as an example of how disruption of a strategic chokepoint can quickly impact the world. This raises questions about whether similar dynamics could emerge in the Taiwan Strait, and how prepared external actors — including the US — would be to respond. Swarm boats, sea mines, and drone attacks proved harder to neutralize than more sophisticated systems — a pattern that would replicate itself in any contested strait scenario. The Taiwan Strait, through which 20 percent of global goods transit, is no less vulnerable than Hormuz.
Should the conflict surpass Trump’s initial estimates, the United States remains exposed to heightened inflationary risks, rising energy costs, and a steady increase in military casualties. Such outcomes would be politically damaging ahead of the midterm elections and could place significant pressure on both Trump and the Republican Party. From a military standpoint, the intensive deployment of sophisticated missiles and naval assets against a secondary power like Iran risks depleting the strategic reserves necessary for any Taiwan Strait contingency in the short term.
What a More Strategic Approach Would Look Like
None of this means the US position is irretrievable. As troubling as the trendlines for American global leadership feel in the current moment, it is essential that American policymakers maintain composure. The United States has a greater margin for error in its foreign policy than any other power, particularly given its energy abundance, deep and liquid capital markets, unique technological ecosystem, dollar dominance, and its democratic institutions, which enable course correction.
But course correction requires first acknowledging what went wrong. A deal that leaves Iran with de facto control of Hormuz, leaves the financial terms disputed, leaves Gulf partners exposed to retaliation, and leaves the nuclear question partially unresolved is not the comprehensive outcome the administration promised. Allies who were not consulted before the strikes began are now uncertain about how Washington would handle the next crisis. That uncertainty is itself a strategic cost — one that does not appear on any official ledger but that adversaries in Beijing, Moscow, and Pyongyang are actively calculating.
Just as the US does not know the PLA’s true readiness, capabilities, and resources, China does not know how degraded the US stockpiles for a Taiwan contingency really are. Rather than just a dispassionate calculation about what skill and resources each side can bring to the fight, deterrence is an inexact guessing game. The Iran war did not end American deterrence. It complicated it. And complicated deterrence, in a world with multiple capable adversaries, is not a condition that manages itself.
Original analysis inspired by Joseph Bosco from The Hill. Additional research and verification conducted through multiple sources.
