STRAIT TALK: The Iran war is back, almost like it never left. Will Americans’ inflation headaches follow? After renewed attacks by both sides this weekend continued with a fresh Iranian assault today, President Donald Trump declared the U.S. will take over the Strait of Hormuz, reintroduce its naval blockade of Iranian ports — and, for the first time, charge a 20 percent fee on maritime cargo. That plan would mirror Iran’s tolls on traffic in the Strait of Hormuz, which less than three weeks ago led Secretary of State Marco Rubio to say that doing so violates international law: “No country is allowed to charge tolls or fees on an international waterway.” Trump framed the move as reimbursement for the U.S. providing security in the region. Trump declared the U.S. henceforth will be “THE GUARDIAN OF THE HORMUZ STRAIT,” and U.S. Central Command said the reimposed blockade will start to be enforced later today. Meanwhile, Iranian hard-liners escalated their threats and demands for revenge over Ayatollah Ali Khamenei’s killing. Tehran’s attacks today went after U.S. military assets in Bahrain, Jordan, Kuwait and Oman. “We will not, under any circumstances, allow the United States to interfere in the management of the Strait of Hormuz,” an Iranian military official warned today. “We’re going to hit [Iran] very hard and keep the strait,” Trump said on Fox News this morning. “We guarded the strait for 50 years and never got paid for it.” Trump blamed Iran for undermining the countries’ agreement with its recent attacks on ships in the strait. More from POLITICO’s Riya Misra The higher tensions and growing violence bring the conflict closer to where it stood before last month’s provisional peace deal, with the ceasefire collapsing and the global economy bracing for impact. Even though attacks haven’t returned to the more damaging levels of the war’s early days, the countries’ feud over whether the strait is open — and who controls it — has now unwound nearly all of the progress in the memorandum of understanding they signed. For American politics, the most immediate question is how the renewed war and blockade will affect oil and shipping, potentially pushing prices higher again after the conflict’s earlier phases spiked inflation stateside. A handful of ships have secretly managed to get through the strait in recent days, Bloomberg’s Weilun Soon reports. But oil prices rose higher today, ticking up roughly 5 percent while still remaining well below this spring’s highs. If that trend continues, it’ll come at a difficult moment for Republicans. Though the war’s unpopularity and inflationary effects had dampened their midterm hopes, gas prices came down more quickly than economists expected after the ceasefire. That had left some GOP strategists feeling more optimistic lately about the elections, NBC’s Matt Dixon reports, compounded by campaign finance boosts and gerrymanders that snatched Democratic districts away. Now gas prices could push higher again. Inflation will be top of mind this week as the newest monthly data comes out tomorrow — at the same time that Fed Chair Kevin Warsh kicks off two days of congressional testimony. And in the long term, from the war to tariffs to AI infrastructure, American businesses are increasingly prepared for inflation to linger and worsen for quite some time, WaPo’s Andrew Ackerman reports. Plenty of companies envision price increases coming soon, as their supply chains are squeezed from every direction. “Republicans have to worry about every election while that continues,” American Action Forum president Douglas Holtz-Eakin told the Post. Good Monday afternoon. Thanks for reading Playbook PM. Drop me a line at eokun@politico.com.
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