Weekly Washington Policy Pulse: Iran Conflict, Congress on Tariffs (March 2, 2026)

0:00So there's a lot of noise about AI, but times too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions. Not noise, proof of how we can help companies get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Let's create smart to business. IBM. Bloomberg Audio Studios. Podcasts, radio, news. This is your weekly Washington policy pulse on the Balance of Power Podcast. I'm Joe Matthew. Every Monday, Bloomberg Intelligence Senior Policy Analyst and Friend of the show Nathan Dean shares his weekly call on upcoming catalysts in the nation's capital. Listen for the most recent and relevant policy research from our team at Bloomberg Intelligence. Now with today's installment, here's Nathan Dean.

1:02Good morning and good afternoon, everybody. My name is Nathan Dean. I'm a senior policy analyst at Bloomberg Intelligence here in the Washington DC Bureau. I want to say thank you for joining the B.I. Washington policy pulse, especially here on March 2nd, a couple days after the United States and Iran. And now we're in conflict, open conflict. And thank you to those of you who are joining us via the Balance of Power Podcast. We always appreciate you listening in. And if you ever have any questions or any comments or anything that we talk about in this call, you need a little deeper dive. Feel free to reach out. My email is endDeen10 at Bloomberg.net. So joining me on the call today is our Senior Defense Analyst Wayne Sanders. Wayne just actually has spent many, many, many years in the US Armed Services. So he will be a good person to talk to you today. Please feel free. Our clients and friends use the chat function, both the Q&A and or the chat. If you'd like to ask questions, we'll get them to you. Wayne, can you just tell us what are your initial thoughts at a high level of what happened over the weekend?

2:05With a focus, I know that you're focusing on the defense contractors. Where do you see this conflict going? And essentially just lay it all down, man. Just tell us what you're thinking. Sounds good. Thanks, Nathan. Thanks for having me. Yeah, so when you look at this, the amount of military firepower that was brought forward during these strikes was very telling. Obviously, right? These are free Iraq war numbers in terms of the buildup. 120 plus US aircraft, 200 Israeli aircraft over the weekend, over 1,000 military targets were struck. Most of the focus there was on leadership, air defense, launchers, missiles, as well as military command and control. Killed so far, we know Supreme Leader Ayatollah Kamini, as well as the IRGC commander. Chief of the Armed Forces was killed, as well as over 48 additional senior Iranian officials were also killed. So from a military power vacuum perspective and all that, this was a fairly successful campaign by US and Israel to be able to do that.

3:10The focus on air defense becomes very, very key, obviously, because it provided air superiority for US and Israeli aircraft, specifically F-22s, which is a suppression of enemy air defense capability. You have F-15 strike eagles, which are a deep strike capability, and then you have your air dominance with your F-35s and your F-16s. So from right there alone, you're really looking at the defense primes, especially tied in with these aircraft platforms. Being key, it's all showing the proof and the mustard for those. You also have the buildup of the Navy, which provided a lot of air defense capability as well with like RTX, SM-6s, and the SM-2s that are on board those as well. What we've seen from Iran coming back is more of a distributed attack methodology, unlike what they were doing in the Israeli Iran conflict, 12-day conflict, specifically, because they're now going out and hitting different targets instead of focusing specific ballies all on one targets.

4:14It's more of what the military refers to as a spray-and-pay mentality. And the reason why they're doing part of that is because they're very limited on a number of launchers that are left. US-NCOM believes is between 100 to 150 launchers left, and potentially around 1,500 missiles left within Iran's stockpiles to be able to affect an impact. That becomes a key point, then, because that is the area where we're actually, where the US and Israel are targeting. They are focusing on these, specifically. We haven't seen as much on the proxies that over the weekend that we thought we would see. It's still something that's up there in terms of options for surges and proxy activities from Hezbollah, Hamas, and IRGC back militias in the region for that. We have seen threats to the Straits of Horn moves, but we have not seen any type of mining or anything of that nature within those areas. And we have unconfirmed reports yet in terms of what Iranian cyberattacks are going to be able to do on that.

5:15Have you heard anything from the White House or the Defense Department that suggests it's about an endgame of where the timing on this goes? Because President Trump was saying four to five weeks. Secretary Hegseth said in his press conference this morning, something similar, what's your thought on the timing? Yeah, they're putting out four to five weeks. And I would like to believe that they're actually pushing. They're going to say that publicly, but where I think they're really pushing is they want to have this thing done within two weeks, Max. And the biggest reason why is the farther it gets pushed, obviously, they're not going to take their foot off the gas. They're not going to allow Iran to take a breath. But they need to be able to do as much of this as possible right up front, just based off of our own US stockpiles. You know, you still have readiness concerns for our number of munitions. You look at the replenishment rate for a lot of our capability and all that. Normally, it's in the hundreds. If you look at pack three interceptors somewhere between, you know, five five 50 to 700 pack three interceptors per year. Well, if we use over 700 of those, you've now lost a year's worth of supply.

6:18So as we try and look forward to a potential China Taiwan contingency in 2027 or beyond any other global contingencies, they want to make sure that they have as many of those as possible. But what they're not willing to do is they're not willing to take their foot off the gas here and allow Iran to breathe and look at somewhere else. Because they're not trying to put boots on the ground, this is going to continue to remain an aerial campaign as well as naval strike capability, which obviously puts defense contractors that are tied in general dynamics, electric boat, hundreds of needles and others in their suppliers for a lot of the naval platforms. And then obviously RTX Lockheed Northrop for not only their the aerial platforms, but also then the munitions they're using in great numbers at this point. And this is a simple question, but can the defense contractors increase production to the point where things will change for them? Or are they sort of sticky in terms of how many they can produce per year? Yeah, they're definitely sticky with how many they can produce per year. You've already seen a ramp up right now. The DOD has put the demand signal out there for 2x to 4x from a munitions production perspective.

7:22You saw Lockheed get the $9.8 billion munitions deal for pack free interceptors. But from the ramp up perspective, they can only do that based off of the production lines. They can only expand those production lines so fast. And if you're looking at it right now in terms of where one year out or even less than a year out from a potential contingency within 2027, it really asks the question is to how many do you want to expand now at the expense of military readiness for a 2027 scenario? I think the defense industrial base is going in the right direction to be able to fix this problem for the future. But I think it's more of a 2029, 2030 solution at this point in time in terms of what we can actually throw at them now. So the last question I'm going to ask you to take your Bloomberg hat off and put on your former army hat. And this is a load of questions. So obviously if there's no good answer here, just say we don't have a good answer. But I'm curious, what do you think the White House's objectives are for this? Because President Trump spent some time over the weekend talking about objectives. And I was just curious, what do you think those objectives are?

8:23Yeah, I would say, you know, if I was, if I'm putting my military commander hat back on, I would look at it in terms of what are considered my high value targets that are remaining that are tied to center of gravity. And then I would also look at the high value individuals that are also tied into this. So I would continue everything that I possibly could. And I think the administration is looking for a complete annihilation of air defense capability as well as missile stockpiles and the launchers that are capable so that whatever government comes in and starts to work on the diplomacy side. The US isn't a much better position from leverage to be able to say, hey, all right, I'm not going to let you guys do your missile stockpiles anymore. And I'm not going to let you guys pursue, you know, nuclear proliferation. And so I think that becomes a key piece of it. But in order to do that, you have to maintain the pressure on that. I think the Trump administration is going to look for somebody, the remaining part of the power vacuum leadership within Iran and then say who are the people that we can most likely work with and then continue to do a press to make sure those individuals that are in place.

9:23Much more difficult to do when you don't have boots on the ground. So it does end up being a lot more on the diplomatic front and but signed behind the scenes, you know, intelligence community work and all that stuff as well as frontline messaging as the military continues to bombard. Okay. Sounds good. Thank you very much. Wayne, we'll let you get back because I know you're extremely busy. Thanks for attending. And if you can ever have any questions for Wayne or for the defense team, you can find all of our information that we're writing about at BI Iran. You can go on there and it's not just defense, but it's also commodities, currencies, you name it some ESG stuff is in there already. So, you know, BI Iran is where everything is. So thank you again, Wayne. Real quickly, just a couple of other things. You know, we talked about the energy exchange call that's happening right now. Just real quickly, I put on a note this morning on congressional tariffs, essentially this note, which was going to be widely read before the conflict this weekend. Essentially so that you're going to hear probably not this week or next week due to the conflict, but, you know, in the next few weeks, you're going to hear statements from Republicans essentially say they either want to codify President Trump's authority to do tariffs via reconciliation or for the Section 122 tariff, which would need Congressional authorization 150 days.

10:39My point is is that a, I don't think the Congress is ever going to get President Trump authorization to do more tariffs and B, I don't think we'll even see a Section 122 vote come up in 150 days just as a reminder. Section 122 allows up to a 15% tariff for 150 days. They need a congressional authorization. I don't think President Trump's plan is to ever get to that point. I think they'll convert it from a Section 122 to a Section 301. So great. Just the last thing to talk about just an update on the Basel III endgame for those of you who are in the banking space. Last week, Fed Vice Chair Michelle Bowman testified to the Senate Banking Committee and she confirmed that the Basel III endgame proposal will be out before the end of March. She also said that there is going to be a G-SIP surcharge proposal. Just as a reminder, the Basel III endgame according to our friends over Bloomberg News is going to increase capo requirements somewhere between three to seven percent. What the Federal wants you to do is to actually look holistically at this together. When you take the G-SIP surcharge proposal into account while we don't know the specifics of it, I think the thinking here is that that proposal is going to dramatically decrease capo requirements so that any increase is well negated in our back in the napkin math is showing around 40 to 50 billion dollars in total in terms of the impact.

11:52But again, that's still to be determined. Last thing is, as I should have mentioned, is that we are going to see a... I'll get to the question in a second. I will see that we're going to see a War Powers Resolution vote come up in Congress this week. I will have my thoughts on that tomorrow. So if you have any questions on the War Powers Resolution, feel free to reach back to you tomorrow. The housing stuff is still going forward. This is President Trump's idea of banning corporations from purchasing single-family homes. Right now, there's this bipartisan bill we've talked about in the past called the Road Act. It's a housing bill. It's bipartisan. And honestly, it's not all that exciting for those of us who look at it from the markets perspective. But this idea of banning corporations from owning single-family homes is getting thrown into that debate. Last I heard over the weekend, and there's been some reporting to this, is that rather than banning corporations, they're talking about changing some tax codes to make corporations less inclined to buy single-family homes. And remember, this is really exposing the single-family reads like AMH and imitation homes.

12:56The folks, the private equity folks like Blackstone, and remember we're talking like 0.5% of their total assets, so single-family homes isn't all that much. I think this actually is going to get postponed this week. They may push that to next week, but I will be keeping an eye on it. And then lastly to the question about, you know, anthropic was used in the initial strikes. My colleague, Matt Schett, now I'm actually just put out a note this morning talking about anthropic in greater detail. And specifically the decision by the Department of Defense over the weekend to label it a supply chain risk. He's essentially his theory, and this is what I'll just say right here, is that he can likely bring anthropic and likely bring a successful court challenge to the February 27th exclusion. From all work, from military-related contracts, if the U.S. defends its actions, we believe that the rationale by the Department of Defense, focused on anthropologists, refused to change the terms of its delayed defense contract. It's probably too flimsy as a basis to support such a drastic action. So Matt Schett, now I'm into the client there. Matt Schett, now I'm as our anthropic expert, so he will be the one to talk to you greater detail.

14:00So I'm going to say thank you very much. We really appreciate your time as always. If you ever have any questions, please feel free to reach out, and we will talk soon. Thank you. Our thanks to Nathan Dean, Bloomberg Intelligence Senior Policy Analyst, bringing you the latest installment of his weekly Washington Policy Pulse. For more from BI or to join this call live each week, you can email Nathan at andeanatbloomberg.net. And come back to the podcast later today for the latest edition of Balance of Power. Bloomberg Daybreak is your best way to get informed first thing in the morning, right in your podcast feed. Hi, I'm Karen Moscow, and I'm Nathan Hager. Each morning we're up early putting together the latest episode of Bloomberg Daybreak US Edition. It's your daily 15 minute podcast on the latest in global news, politics, and international relations.

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