The financial burden of President Trump’s military engagement with Iran is substantial and continues to grow. Reports indicate that in a confidential briefing on Tuesday, Pentagon officials informed congressional members that the conflict’s cost surpassed $11.3 billion in its initial six days. This estimate does not account for pre-deployed equipment and personnel costs incurred before the opening strikes.
Kent Smetters, faculty director of the Penn Wharton Budget Model, projects current daily expenditures at approximately $800 million. Alternative assessments, such as one from British security and risk advisor John Phillips, place the daily cost at $1 billion. Smetters stated that if the hostilities continue for a full two months, or an additional seven weeks, it would impose a net new cost of $65 billion on U.S. taxpayers.
These figures emerge against a deteriorating U.S. fiscal landscape characterized by soaring national debt and rising interest obligations. A February 11 report from the Congressional Budget Office forecast a $1.853 trillion budget shortfall for Fiscal Year 2026, a result of federal spending exceeding tax revenue by 33%. A 60-day war with Iran would expand the deficit by the $65 billion, plus about $1.4 billion in interest, totaling roughly $66.4 billion. This constitutes a 3.6% increase, lifting the deficit’s share of GDP from a projected 5.8% to 6.0%. This $66.4 billion would be added to the national debt, increasing the required borrowing—and subsequent interest payments—annually.
However, the war’s fiscal impact should not be viewed alone. Shortly before the initial attack, the Supreme Court also impacted the budget by striking down the Trump-era tariffs. According to the Committee for a Responsible Federal Budget, replacing the previous border tariffs with a universal 10% levy would result in $74 billion less revenue this year. Combining this $74 billion revenue loss with the $65 billion in war spending nearly doubles the budget impact to $139 billion, boosting the CBO’s projected deficit by 7.5%. Importantly, tariff revenue losses differ from one-time war expenditures; if made permanent, the reduction in import duties would create a recurring, structural deficit increase year after year.
Without a strategy to reopen the Strait of Hormuz, KPMG chief economist Diane Swonk fears the conflict could persist for another six months, driving oil prices above $130 per barrel. Some analysts believe prices could reach $200. Even if the campaign continues for several more weeks, the harm to America’s already strained finances will be significant.