WIRED reported Trump had initially approved releasing about $20bn in frozen funds for Iran's highly enriched uranium, with JD Vance, Steve Witkoff and Jared Kushner involved in talks in Islamabad.
The proposal collapsed after aides warned it could look like giving Tehran "pallets of cash", reviving Trump's past attacks on Barack Obama's nuclear deal and complicating efforts to secure a diplomatic exit.
The setback comes as reports describe extensive Iranian damage to US bases in Bahrain and Kuwait and strains with Gulf allies, underscoring wider pressure on Trump's Iran strategy.
How is Iran boosting oil profits by 40% despite a US naval blockade and crippling economic sanctions?
After severe damage to its bases, can the US still secure its long-term strategic interests in the Middle East?
The Collapse of the $20 Billion U.S.-Iran Uranium-for-Assets Negotiation and Its Regional Fallout
Overview
In May 2026, President Trump publicly denied any financial exchange in the proposed U.S.-Iran nuclear deal, which involved Iran surrendering enriched uranium in return for sanctions relief and frozen asset releases. Despite this, the deal was actively negotiated with mediation from Pakistan, Egypt, and Turkey, and pressured by a U.S. naval blockade. Trump linked the deal to reopening the Strait of Hormuz but threatened military action if Iran refused. Ultimately, Trump rejected the deal due to political concerns and a strategic shift toward maximum pressure. This rejection weakened Iran's regional standing, prompted Gulf states to strengthen alliances with the U.S. and Israel, and led Iran to present a new peace proposal, showing slight flexibility amid ongoing tensions and a fragile cease-fire.