After nearly four months of fighting, a blockade of one of the world’s busiest shipping corridors, a threat of “annihilation” of an entire country, and a shaky ceasefire, the war in Iran is over—or so it seems. Talks between American and Iranian governments to reach a preliminary deal and officially end the conflict continued well into Tuesday, despite months of the president declaring the war was over. And yet, with each passing day, the taxpayers’ bill for the war keeps ticking up.
On Monday, the Department of Defense told senators it needed an additional $80 billion to cover the cost of U.S. involvement in the conflict, just weeks after warning that the military could potentially run out of money should Congress not pass a new spending bill.
After nearly four months of war, the conflict has reshaped key parts of the U.S. and global economies for years, if not decades to come. Americans have felt the cost acutely at the gas pump and in the supermarket aisles. Now, nearly two-thirds of Americans disapprove of President Donald Trump’s handling of the war, even if he doesn’t seem to mind the growing consensus against the conflict.
“I don’t think about Americans’ financial situation,” Trump said in May. “I don’t think about anybody. I think about one thing: We cannot let Iran have a nuclear weapon. That’s all.”
The war has cost U.S. taxpayers and consumers at least $132 billion so far, according to Moody’s Analytics, but the cost to Americans is far from over and could last generations.
Billions in military spending
One of the clearest and most immediate costs of the war is the billions that have been spent on direct military action. On May 12, Acting Pentagon Comptroller Jules Hurst III told the House Armed Services Committee that the war had cost $29 billion. Despite the six weeks that have passed, the Pentagon referred Fortune back to Hurst’s testimony when asked for an updated estimate this week.
Experts, however, say that number pales in comparison to the true cost of the conflict. Take for example the first 48 hours of the war, in which the U.S. spent $1 billion—and initially continued spending continued at a rate of $1 billion a day. Linda Bilmes, a Harvard Kennedy School senior public policy lecturer and a federal budget expert, said upfront spending is more likely to total the $200 billion amount in additional funds the Pentagon requested in March. That amount covers the costs of deploying more than 50,000 troops, repairs and maintenance, and munitions.
Bilmes says the Defense Department is low-balling their estimates by calculating the cost of current munitions, not how much it will cost to replace them. For example, the Tomahawk missiles used in Iran cost between $1 million and $2 million to make, but now it costs between $3 million to $6 million to replace, based on signed contracts with defense contractors reviewed by Bilmes.
“Replacement cost of the inventory is two to three times higher than the inventory costs they’re using,” she told Fortune.
That number is sure to drive up costs significantly, especially given that within the first seven weeks of the war, the Pentagon used at least 45% of its stockpile of Precision Strike Missiles; 50% of its Terminal High Altitude Area Defense (THAAD) interceptors, and almost half of its Patriot ballistic interceptor missiles, according to an analysis from the Center for Strategic and International Studies.
In the medium-term, the government will have to repair damage to U.S. military installations across the Middle East in Bahrain, Qatar, and the United Arab Emirates, including radar and housing units, according to Bilmes. That includes 228 structures that have been severely damaged, which, according to her estimates, can cost $200 to $300 billion to repair over the next three to five years. On top of that, the U.S. will likely provide aid to allies—especially the UAE, which coordinated strikes on Iran with the U.S. and Israel—to rebuild damaged buildings as well.
All in all—while also accounting for military benefits and increased government spending—the total cost of the world will topple $1 trillion, Bilmes predicted.
The prediction comes after the Trump administration has asked Congress for a 42% increase on the defense budget for the next fiscal year, bringing military spending to $1.5 trillion—something Bilmes believes is unlikely to happen.
“Congress is not going to do that, but even if you imagine that Congress eventually approves $50 or $100 billion a year above and beyond what it would have approved in the absence of this war, over 10 years, that’s already 500 billion to a trillion dollars,” she said. “These wars have exposed a lot of issues in terms of the various shortages of munitions and all the other things we have seen, and the fact that it’s very difficult when there’s a live war going, it’s harder for Congress to say no to certain kinds of increases.”
Energy prices
Not only is there a cost to the American taxpayer on the federal level, there’s also a cost to Americans at the pump and grocery aisle. The war choked off oil supply to the entire world, significantly raising prices on oil products while cutting off two billion barrels of oil from the world’s supply, according to data analytics firm Kpler.
As of June 23, Americans have paid an extra $61.7 billion for gasoline and diesel since Feb. 28, according to Brown University’s tracker. That’s $471.20 in added expenses per household. High gas prices haven’t been felt evenly across the country.
States such as Wyoming, Utah, and Alaska have experienced increases of more than $1.30 per gallon, while people in states like Florida, Texas, and Indiana are paying less than $0.80 more per gallon.
“Some places like Texas and Alabama were really feeling the burden more in part, because those are big states where people drive a lot, and they also tend to drive heavier vehicles or higher-consuming vehicles, like pickup trucks, so the burden for an average household was a lot higher in those places,” said Jeff Colgan, the Brown political science professor behind the tracker, told Fortune.
While gasoline prices are slowly coming down from their $4.56 peak average price since the war began, experts and the U.S. Secretary of Energy don’t expect prices to go back down below $3 until next year.
But compared to the rest of the world, Americans have fared better when it comes to high energy costs. Countries such as the Philippines, Sri Lanka, and Pakistan have implemented four-day work weeks to save on energy usage, and Australia made public transport free to encourage people not to drive.
Loss of economic growth
The most unpredictable impact of the war will be its overall effect on global economic growth.
Justin Wolfers, a professor of economics and public policy at the University of Michigan, estimated in May that stocks are 5% lower than they would be otherwise, a loss worth $3 trillion. The Institute for Economics and Peace estimated that the war has reduced global GDP by about 0.6%, impacting fragile economies the most.
Despite recent positive job reports, Federal Reserve economists Dario Caldara and Matteo Iacoviello predicted that a million fewer Americans will be working in a year due to higher economic risks. Similarly, European construction, transportation, metals, and chemicals could lose up to 1.3 million jobs due to high energy prices, the European Commission’s labor chief estimated.
Future Americans could be paying for this war for generations. Less than a month into the war, the national debt crossed $39 trillion. Military spending, including the $80 billion request this week, will be paid for through borrowing, raising the national debt even higher. In the long run, high national debt will likely lead to higher borrowing costs, wage stagnation, and more expensive goods and services, according to the Government Accountability Office.
