US Economy Faces Risks as Iran War Escalates
Washington, DC – The ongoing war in Iran poses a potential economic risk to the United States, despite President Donald Trump’s attempts to downplay the consequences. The conflict, which began with US and Israeli strikes against Iran, is driving up global oil prices and raising concerns about a potential disruption to vital trade routes.
From Campaign Promise to Military Action
During his 2025 election campaign, President Trump positioned himself as an opponent of prolonged US military engagements, stating, “I will not start wars, I will stop wars.” But, approximately a year later, the United States is planning to deploy ground troops to Iran, a move that could have significant political and economic ramifications.
Rising Oil Prices and Economic Slowdown
The war has already led to a sharp increase in the cost of gasoline and diesel in the United States. The Economist reports that rising petrol prices are putting pressure on the US economy and threatening Republican prospects in the midterm elections. According to CNBC, diesel prices in the US have risen by around 34 percent to $5.04 per gallon.
Economists surveyed by the Financial Times anticipate a decline in economic growth if the price of oil remains above $100 per barrel. James Hamilton, a professor at the University of California San Diego, noted that a prolonged blockage of the Strait of Hormuz – a critical waterway for global oil trade – could lead to a “significant downward revision of the growth forecast for this year.”
The Strait of Hormuz: A Key Vulnerability
Iran’s Revolutionary Guard has effectively closed the Strait of Hormuz in response to US and Israeli attacks. Approximately 20 percent of global oil and gas trade passes through this strait, causing substantial price increases in world markets. Al Jazeera reports that US forces have struck nearly 2,000 targets in Iran since the war began, including critical infrastructure like oil refineries and desalination plants.
Impact on US Businesses
Rising diesel prices are particularly concerning for the US economy, as fuel is essential for the transportation sector. Increased logistics costs for US companies are a direct consequence. Andy Lipow, president of consulting firm Lipow Oil Associates, warned, “People should really be concerned about rising diesel prices.” Experts estimate the impact could be a 0.25 to 0.5 percentage point reduction in GDP growth if oil prices stay above $100 by the end of 2026.
White House Response
Despite these concerns, the White House is attempting to minimize the potential economic impact. President Trump has stated his commitment to reopening the Strait of Hormuz, promising to “relentlessly bomb Iranian positions on the coast” and “continually sink Iranian boats and ships” via his Truth Social platform. Kevin Hassett, director of the White House National Economic Council, maintains that the US economy remains “stable” and that President Trump “will not back down under any circumstances.”
As of March 6, the conflict has resulted in over 1,200 Iranian deaths, 10 Israeli deaths, and at least six US troop fatalities. USA Today reported that President Trump predicts the war will last several weeks.