For the United States, the war in Iran does not constitute a simple external event that adds to an otherwise stable economic balance; rather, it functions as a revealer of contradictions already inherent in the economic-political configuration of the Trumpian cycle. At least three lines of tension converge in this configuration: the return of an inflationary dynamic that has not been fully reabsorbed, the recourse to tariffs as an instrument of commercial and industrial policy, and the persistent ambivalence of a strategy that aims at a relatively weak dollar without being able to fully discipline the logic of global markets.[1]In this sense, the war does not only produce an increase in the price of crude oil: it reconnects energy prices, import costs, inflation expectations, interest rates, financial markets and political consensus, bringing out the structurally unstable nature of the entire system.[1][2]
The first transmission channel is naturally energy. Since the beginning of the war, Brent has risen by more than 50%, with peaks above 119 dollars a barrel; in a central scenario collected by Reuters among analysts, the average price could be around 134.62 dollars, while in a more serious scenario, with damage to Iranian export infrastructure, it could reach or exceed 150 dollars.[2]The explanation for this violence is not cyclical but structural: approximately 20% of the world's oil and gas flows pass through the Strait of Hormuz, so even a partial disruption translates into a rapid rewriting of international energy prices.[2]The war shock, therefore, is not confined to the Middle Eastern theatre, but is universalised through the transport, insurance, refining and speculative expectations systems.[2]
In terms of the geographical distribution of costs, the asymmetry is clear. The US Energy Information Administration estimates that in 2024, approximately 84% of crude oil and condensate transiting through Hormuz was destined for Asian markets, with China, India, Japan, and South Korea together accounting for 69% of these flows.[3]The International Energy Agency confirms that, even for liquefied natural gas, Asia's weight is dominant: in 2025, almost 90% of LNG transiting through Hormuz was destined for Asia, while just over 10% went to Europe; however, this share still represented approximately 7% of total European LNG inflows.[4]This leads to a theoretically relevant distinction: Asia pays above all the material cost of the vulnerability of the routes, while Europe pays above all the macroeconomic cost of expensive energy, i.e. inflation, stagnant consumption, pressure on public budgets, and monetary tension.[3][4]
This second aspect has been made particularly clear in the most recent European assessments. According to European Commissioner Valdis Dombrovskis, even a brief disruption in energy flows could subtract around 0.4 percentage points from the Union's growth in 2026 and add up to 1 point to inflation; in a more prolonged scenario, the damage could reach 0.6 points of lost growth in both 2026 and 2027.[5]The war in Iran, therefore, does not only act as an energy supply shock, but as a stagflationary device, because it combines an increase in prices and a compression of economic activity.[5]In this sense, it differs from a purely recessionary shock or a purely inflationary shock: it produces, more radically, a crisis of coordination between monetary policy, fiscal policy and trade policy.[5][6]
The transition from energy markets to domestic prices occurs through a double chain: producer prices and consumer prices. On the producer price side, energy is reflected in transportation costs, chemicals, fertilizers, logistics, metals, and semi-finished products; on the consumer price side, it first appears in gasoline, diesel, utility bills, and food, before spreading to industrial goods and services. Reuters reported that in the United States, import prices increased by 1.3% in February 2026 on a monthly basis, the highest figure in almost four years; even more significantly, core import prices, excluding fuel and food, recorded an annual increase of 3.0%.[7]This data indicates that the increase cannot be reduced to a simple "oil effect": it reflects a broader transmission of imported costs to the entire production system.[7]
This is precisely where the question of tariffs comes in. If the war in Iran reignites energy inflation, tariff policy makes it more persistent and less absorbable. Jerome Powell has stated that between half and three-quarters of the inflation still exceeding the target depends on the effects of tariffs, and that it remains uncertain to what extent the Federal Reserve can "look beyond" the current energy shock as if it were a transitory phenomenon.[1]The theoretical point is relevant: the tariff, politically presented as a measure to protect domestic manufacturing, actually also behaves as an indirect tax on imported goods, components and intermediate goods. When this mechanism is combined with a sharp rise in energy prices, the result is not only an increase in prices, but their greater stickiness. The shock does not dissipate quickly; rather, it tends to settle in margins, price lists, expectations and the pricing choices of companies.[1][7]
The most recent OECD macroeconomic scenario also confirms the persistence of the inflationary framework. In its March 2026 interim report, the organisation estimates that G20 inflation in 2026 will be 1.2 percentage points higher than expected, reaching 4.0%, before falling to 2.7% in 2027 with the easing of energy tensions.[6]This is not a marginal quantitative detail: a revision of this magnitude signals that the interaction between expensive energy, trade tensions and geopolitical instability no longer produces episodic inflation, but a condition of prolonged fragility of the disinflationary process.[6]The war in Iran, therefore, does not create inflation ex nihilo in 2026, but is grafted onto a context in which disinflation had already been made more difficult by protectionism, increases in imported costs and the fragility of logistics chains.[1][6]
The dollar problem further complicates the picture. In terms of political economy, Trump's preference for a relatively weaker dollar responds to a neo-mercantilist logic: favoring exports, reducing the competitive advantage of imports, and supporting domestic production. But this preference clashes with the dollar's systemic function as a safe haven. Reuters reports that the dollar index rose by 2.57% in March 2026, the largest monthly increase since July 2025, precisely because of the increased demand for safe havens connected to the war.[8]A structural paradox ensues: the White House may politically desire a weaker dollar, but a war in the Gulf restores the dollar's centrality as the currency of global fear, removing it from immediate political governability.[8]
Added to this is a second, temporal paradox. Reuters observes that the previous weakness of the dollar had already contributed to the increase in import prices; now, however, the phase of strengthening of the dollar does not eliminate the problem, but rather recodes it in terms of financial constraints and pressure on interest rates.[7][8]The past weakness has fueled imported inflation; the present strength, produced by the flight to safety, makes financial conditions more onerous and signals that the crisis has shifted from the level of prices alone to that of the overall stability of the cycle. In other words, the dollar does not offer a way out: first it contributes to the increase in import prices, then it revalues as a symptom of systemic fear.[7][8]
Against this backdrop, the Federal Reserve finds itself in a particularly difficult position. Several central bank officials have warned that the conflict increases the risks for both inflation and growth. Anna Paulson has stressed that public opinion, after years of attention to prices, has become more sensitive to shocks in fuels and fertilizers, and that inflation expectations, while remaining formally anchored, are now more fragile.[9]Thomas Barkin added that inflation was already stuck around 1 point above the 2% target before the new surge in oil prices.[10]With tariffs continuing to push up commodity prices and an energy shock directly affecting expectations, a long war doesn't just raise gasoline prices: it reduces the scope for rate cuts, prolongs high interest rates, and transmits uncertainty to bond and credit markets.[1][9][10]
The social effects of this dynamic are already measurable. According to Reuters, the University of Michigan's consumer confidence index fell to 53.3 in March 2026, from 56.6 in February, while the average price of gasoline rose to $3.98 a gallon; in the same context, one-year inflation expectations rose to 3.8%.[11]Here, the conflict translates into a form of implicit and regressive taxation: it erodes disposable income through fuel, logistics, food, the cost of imported goods and, indirectly, interest rates. War is thus internalized in everyday life not as an abstract geopolitical category, but as a worsening of the material standard of existence.[11]
From this perspective, the issue of energy extra-profits is not secondary. Reuters has calculated that the five major Western companies[BP, Chevron, Exxon Mobil, Shell and TotalEnergies ed.]returned over 111 billion dollars to shareholders in 2023 alone, despite the reduction compared to the peak in 2022.[12]This shows that a significant share of the energy rent generated by the crisis cycle is converted into dividends and buybacks, while the cost of the adjustment falls on families, energy-intensive companies and public budgets. From this perspective, war is not only a price multiplier: it is also a mechanism of regressive redistribution, which socializes the costs and privatizes a significant part of the benefits.[12]
If, therefore, one wonders why Trump cannot continue the war in Iran for long from an economic point of view, the answer must be sought in the interaction of these factors. High oil prices contradict the promise of a controlled cost of living; tariffs prevent the inflation of goods from being quickly reabsorbed; the safe-haven dollar escapes the political will to weaken it; the Federal Reserve, faced with inflation still above target and more unstable expectations, has less room to loosen rates; finally, consumers experience the war as more expensive fuel, more onerous mortgages and a reduction in purchasing power.[1][2][7][8][9][11]A long war, in other words, not only erodes strategic resources or political capital: it disorganizes the very coherence of Trump's economic model, founded together on the promise of disinflation, protectionism and political management of the exchange rate.[1][8]
The conclusion can be formulated in more general terms. The war in Iran demonstrates that, in the contemporary economy, the energy issue continues to represent the main mediator between geopolitics and material life. But it also shows something more specific: that Trump's synthesis of tariffs, domestic growth, and the desire to govern the dollar encounters an objective limit when the global energy order enters into crisis. Tariffs cease to appear as protection and reveal themselves as a factor of inflationary persistence; the dollar ceases to be a fully political lever and returns to functioning as a symptom of systemic fear; oil ceases to be an external variable and imposes itself as the site where economic policy loses control of its own narrative. In this sense, the war in Iran is not only an international crisis: it is the point at which the political economy of Trumpism is subjected to its harshest material test.[1][2][8]
Peter Stara
Notes
[1]Reuters, Powell says tariffs keeping inflation elevated, Fed watching energy prices closely, 18 March 2026.
[2]Reuters, Oil prices to stay elevated across Iran war scenarios, 27 March 2026.
[3]US Energy Information Administration, Amid regional conflict, the Strait of Hormuz remains critical for oil flows, 16 June 2025.
[4]International Energy Agency, Strait of Hormuz, 6 February 2026.
[5]Reuters, Iran war could mean stagflation for EU, Dombrovskis says, 27 March 2026.
[6]OECD, Economic Outlook, Interim Report, March 2026.
[7]Reuters, US import prices post biggest increase in four years amid broad rise in goods, 25 March 2026.
[8]Reuters, Dollar rides haven demand as Middle East talks ring hollow, 27 March 2026.
[9]Reuters, Fed's Paulson worried about war's impact on inflation expectations, 27 March 2026.
[10]Reuters, Fed's Barkin says "fog" again obscuring economic outlook, March 27, 2026.
[11]Reuters, US consumer sentiment slips to three-month low as war fans inflation fears, 27 March 2026.
[12]Reuters, Big Oil offers record returns to lure investors back, 7 February 2024.
https://umanitanova.org/dazi-dollaro-e-shock-energetico-la-guerra-in-iran-come-crisi-delleconomia-politica-trumpiana/
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Source: A-infos-en@ainfos.ca
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