Kent Smetters, faculty director of the Penn Wharton Budget Model, forecasts that the meter is now running at roughly $800 million a day. Other estimates, including that advanced by John Phillips, a British safety, security, and risk advisor, put the daily tab at $1 billion. Smetters told Fortune that if the conflict rages for a total of two months, or seven more weeks, that it will inflict net new expenses on U.S. taxpayers of $65 billion.
The numbers come amidst a backdrop of a worsening U.S. financial picture thanks to the spiraling national debt, and the mounting interest payments that are due. In its Feb. 11 report, the CBO projected a gap between expenditures and revenue for FY 2026 of $1.853 billion. The U.S. gets there by spending 33% more than the Treasury collects in taxes. An Iran war that lasts 60 days would hike the deficit by that $65 billion plus $1.4 billion in interest, or around $66.4 billion. That’s an increase of 3.6% that would raise the shortfall’s share of GDP from the forecasted 5.8% to 6.0%. The $66.4 billion would get tacked onto the deficit, and raises the amount we need to borrow, plus interest, year after year.
But it’s best not to look at the war impact in isolation. Just days before the first attack, the SCOTUS also dealt a blow to the budget by nixing the Trump tariffs. The Committee for a Responsible Federal Budget estimates that if Trump replaces the former border duties with a 10% blanket rate, the U.S would collect $74 billion less this year than under the previous regime. Add that $74 billion to the $65 billion in spending, and the budget hammering almost doubles to $139 billion, raising the CBO-projected deficit by 7.5%. Keep in mind that tariff losses aren’t mainly a one-time hit like the war spending. If permanent, the loss of a large part of the Trump import duties would represent a year-after-year, recurring, structural increase in deficits.
In the absence of a plan to reopen the Strait of Hormuz, KPMG chief economist Diane Swonk worries that the conflict will drag on for up to six more months, sending oil prices north of $130 per barrel. Some analysts think it could hit $200. But should the campaign drag on for even several more weeks, the damage to America’s fragile finances will prove substantial.
