Why Trump Can't "Chicken Out" in Iran
Withdrawal could end the Petrodollar and US Empire
The concept of TACO (Trump Always Chickens Out) has achieved such mindshare; and the situation in Iran seem so untenable that it natural to conclude that Trump will find a face-saving excuse for withdrawal. But there is one big complication — Withdrawal could end the Petrodollar and accelerate the unraveling of US finances and the US Empire.1
End of the Petrodollar?
Potential for Petrodollar Change
Thus far, Iran has not been stopping all traffic through the Straight of Hormuz — they have let allies like China and India transit the straight and they have offered to let all others transport oil if they agree to trade it in Chinese Yuan rather than US dollars.
Even if the Iranians do not insist on ending the Petrodollar policy in the Gulf immediately upon US withdrawal, what would stop Iran from enforcing a PetroYuan or PetroBRICS standard in the future?
Petrodollar History
After the US went off the gold standard in 1971, Henry Kissinger and US Treasury Secretary William Simon negotiated a deal with Saudi Arabia that Saudi Arabia would agree to sell oil only in US dollars. The deal was especially useful to the US because the US dollar was no longer backed by gold and the agreement generated demand for dollars because every nation has demand for oil. Iranian assertion of control over the strait could reverse that Petrodollar policy — or at least Iran is floating that possibility.
Consequences of a PetroYuan, BRICS, etc
If fewer people use the US dollar for oil, there will be fewer people seeking to buy US treasury bonds to collect interest on their dollar savings. Buying treasury bonds is another way of saying “lend the US government money,” and when fewer people want to lend the US dollars, interest rates go up for US government borrowing.
Currently, the US government has to pay $1 trillion/year in interest on its debt. The US is facing even larger deficits and I’ve heard that the government finances are not solvent if it has to pay in the 5 percent or more range. Am I wrong about this?
What would change my mind?
The threat to the Petrodollar I outlined does not apply if the US can withdraw (TACO) and still maintain its military bases and influence in the Gulf, and thus the Petrodollar. However, from what I’ve heard, the Gulf Countries no longer feel like American bases function as protection when Gulf countries are caught in the crossfire between Israel/US and Iran.
Another point for falsification would be if Gulf Countries prefer to do business in the US dollar and Iran does not have the interest and ability to overridee this.
A final possibility is that China does not actually want the PetroYuan and is merely improvising. But if the US were to claim victory and withdraw, it would have to believe that China/BRICS are not a threat in the Gulf.
Media coverage?
I noticed that American media has not been reporting on this Chinese Yuan angle of the conflict and I haven’t seen any American outlets other than DemocracyNow cover the Petrodollar angle, but you can easily find the yuan and Petrodollar story in Asian media.
What do you think? Is this a significant development? Do you think BRICS and China are serious about wanting Gulf oil priced in Yuan? What sort of timing would you expect as this develops further?
Iran Petrodollar News:
1. The End of the Petrodollar? How Iran War Is Reshaping the Global Economy: Author Laleh Khalili, Democracy Now (US), March 19, 2026.
2. Iran’s Hormuz yuan play a direct hit on the petrodollar, Asia Times (Hong Kong), March 20, 2026.
Benefits to Iran
Avoid US Sanctions
“Strategic Reciprocity with China” - which assisted Iran while Iran has been sanctioned
Symbolic - challenge Petrodollar order
Note: “The dollar is not about to be dethroned overnight, nor is the yuan ready to assume the full burdens of a global reserve currency.”
3. India, Pakistan, China, and now Japan? Full list of countries whose ships are allowed to pass through Strait of Hormuz, Mint (India), March 21, 2026.
4. Pakistan tanker crosses Hormuz after oil payment made in Chinese yuan: Mushahid, AAJ TV (Pakistan), March 22, 2026.
Previously:
Is the Actual Goal for Iran Staticide?
The reason why you’re not told the goals for Iran may be that they are too Evil to say —dismembering the Iranian state and creating civil war, fighting over scarce water, and ethnic division, so that Israel becomes the undisputed hegemon in the middle east and can bomb any part of the states formerly part of Iran without contest (similar to Syria).
The end of the Petrodollar and US Petrodollar will not happen overnight, but if the US is kicked out of the Gulf, as I believe is the Iranian intention, it would be a momentous event that accelerates the fall of the Petrodollar and the US Empire.