USA & Canada Intelligence Brief for Thursday, February 24, 2026

What matters today

1. State of the Union: Trump Faces a Nation Questioning His Priorities

President Trump delivers his first State of the Union of his second term tonight at 9 p.m. ET, themed “America at 250: Strong, Prosperous and Respected.” The speech comes during a partial DHS shutdown now in its eleventh day — the first SOTU delivered during a government shutdown in American history. Over 25 Democratic lawmakers are boycotting. Virginia Governor Abigail Spanberger will deliver the Democratic response.

Trump faces a public increasingly sceptical of his agenda. Just 39% approve of his handling of the economy (Quinnipiac), down from 49% shortly after inauguration. Immigration approval has collapsed to 38% after two US citizens were killed by ICE agents in Minneapolis. A CNN/SSRS poll finds broad doubts about whether his policies are helping the nation. The speech is expected to address Iran (with military strikes under active consideration), tariff policy after the SCOTUS rebuke, and affordability. Multiple Epstein survivors have been invited as congressional guests.

2. Section 122 and the Post-SCOTUS Tariff Landscape

The Supreme Court struck down Trump’s IEEPA tariffs 6–3 on February 20, with Roberts writing that IEEPA “does not authorize the President to impose tariffs.” Gorsuch and Barrett joined the liberal justices. Within hours, Trump signed a new 10% global tariff under Section 122 of the Trade Act of 1974, a balance-of-payments provision that caps tariffs at 15% for 150 days. The levy took effect at 12:01 a.m. on February 24, though Trump had announced it would be 15%.

The fiscal implications are staggering. RSM estimates $100–130 billion in IEEPA refunds are owed; Yale Budget Lab puts the figure at up to $175 billion. Treasury collected $269 billion in tariff revenue through January 2026. Speaker Johnson said he does not believe the administration should issue refunds. Yale projects the remaining tariff regime will add 0.3 percentage points to unemployment by year-end and shrink long-run GDP by 0.1–0.2%. The Q4 GDP print of 1.4% — against a 2.5% consensus — combined with core PCE at 3.0% has fuelled stagflation narratives. The “tariff cliff” of July 24, when Section 122 expires absent congressional extension, is now the most important date on the US fiscal calendar.

3. US Surges 150+ Aircraft Toward Iran as Trump Clashes With Top General

The Washington Post reported today that the US military has shifted more than 150 aircraft to bases in Europe and the Middle East since the second round of Iran nuclear talks ended without a breakthrough. The USS Gerald R. Ford, the world’s largest aircraft carrier, is transiting to join the USS Abraham Lincoln strike group in the Arabian Sea — giving the US two carrier groups within striking distance. Patriot and THAAD missile defence systems have been reinforced in Qatar and Saudi Arabia.

The buildup has exposed a sharp civil-military rift. Trump publicly claimed JCS Chair Gen. Dan Caine believes a war with Iran would be “easily won.” But the Washington Post and CBS News report Caine privately warned Trump of critical munition shortfalls, a lack of allied support, and high US casualty risk. CENTCOM commander Adm. Brad Cooper has not been invited to meetings or spoken with Trump since January, according to Axios. Secretary Rubio is scheduled to travel to Israel on February 28 to meet Netanyahu. Inside Iran, student protests erupted at six universities over the weekend — the largest demonstrations since the 2025 uprising. Iran sent a letter to the UN Security Council warning it would respond “decisively and proportionately” to any aggression. The CIA released a Persian-language social media video encouraging Iranian citizens to contact the agency.

4. Pentagon Confronts Anthropic Over AI Safeguards in Classified Systems

Defense Secretary Pete Hegseth meets Anthropic CEO Dario Amodei today in what a senior Defense official described to Axios as a “sh*t-or-get-off-the-pot meeting.” The Pentagon wants broader latitude to deploy Claude in classified environments, while Anthropic has resisted lifting its safety guardrails. A January 9 Hegseth memo ordered AI companies to remove restrictions on their technology for military use, triggering a renegotiation of Anthropic’s Pentagon contract.

The stakes are sharpened by competition: Elon Musk’s xAI has signed an “all lawful purpose” agreement allowing Grok to operate in classified systems without restrictions. Anthropic is holding out against that standard. Claude is described as the only AI model currently available in the military’s classified environments, giving Anthropic both leverage and creating dependency risk for the Pentagon. Separately, NORAD and USNORTHCOM launched Arctic Edge 2026 on February 23 — joint exercises with Canada and Denmark across Alaska and Greenland running through March 13, amid escalating Arctic competition with Russia and China. The US military also killed three people in a Caribbean drug-interdiction strike Monday, bringing the total to at least 151 since the “narcoterrorist” campaign began in September.

5. Fed Warns AI Unemployment May Be Beyond Reach of Rate Cuts

Federal Reserve Governor Lisa Cook told the National Association for Business Economics on Tuesday that artificial intelligence could drive unemployment increases that monetary policy cannot fix. “If AI continues to raise productivity, economic growth could remain strong, even as churn in the labor market leads to an increase in unemployment,” Cook said. “A rise in unemployment may not indicate increased slack. As such, our normal demand-side monetary policy may not be able to ameliorate an AI-caused unemployment spell without also increasing inflationary pressure.”

Cook’s remarks frame an emerging policy dilemma: AI displacement producing simultaneous productivity growth and rising joblessness — a scenario where rate cuts fuel inflation without restoring employment. Markets rebounded Tuesday from Monday’s 822-point Dow sell-off, with the index gaining 416 points (+0.9%). AMD surged 10% on Meta’s 6-gigawatt GPU deal. But Novo Nordisk plunged 16.4% after its CagriSema obesity drug underperformed Eli Lilly’s Zepbound in a head-to-head trial. PayPal is reportedly drawing takeover interest. Nvidia reports Wednesday, the week’s most consequential earnings event, with $50 billion in short interest riding on the result.

Assessment

The United States enters its State of the Union moment facing simultaneous crises across every dimension of power. The Supreme Court’s IEEPA ruling has shattered the legal architecture of Trump’s trade policy, forcing a pivot to Section 122 — a statute never used for tariffs, carrying a 150-day expiry that creates a “tariff cliff” in July, three months before midterm elections where Republicans defend razor-thin majorities. The $130–175 billion refund liability is an economic event without modern precedent.

Iran is the most acute crisis. The revelation that 150+ aircraft have been repositioned since Round 2 collapsed marks the largest US force projection since Iraq. But the Trump–Caine rift is the more dangerous signal: a president publicly misrepresenting his top general’s advice to manufacture consensus for military action, while the CENTCOM commander has been frozen out of deliberations entirely. The military is preparing options it has privately cautioned against executing. Rubio’s visit to Netanyahu on February 28 — one day after Geneva — suggests contingency planning for a post-diplomacy posture is already underway.

The Hegseth–Amodei confrontation today crystallises a tension that will define the next decade of defence policy: the US military’s most capable AI tool is controlled by a company that refuses to remove its safety guardrails, while a competitor willing to comply (xAI) offers an inferior alternative. The Pentagon’s dependence on a single commercial AI provider for classified systems is a strategic vulnerability regardless of how the meeting resolves. Meanwhile, Fed Governor Cook’s warning that AI-driven unemployment may be immune to monetary policy introduces a new macroeconomic paradigm. If productivity rises while jobs disappear, the Fed’s primary tool — interest rates — cannot fix the problem without reigniting inflation. This is the policy trap that markets are beginning to price, and Nvidia’s earnings Wednesday will determine whether the AI investment thesis survives the week or accelerates the repricing.

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