MW Trump's war on Iran could make many things more expensive, despite his affordability promises

By Brett Arends

How do you campaign on 'affordability' if you just pushed up prices?

Residents survey bomb damage in Tehran on Monday.

You will be paying more for gasoline following this weekend's strikes on Iran, although how much more and for how long remain to be seen.

And if markets are to be believed, you may soon end up paying more for other products and services as well.

Gasoline futures rocketed as much as 20 cents per gallon when markets reopened Monday in the wake of the weekend attack, which killed the supreme leader of the Iranian government and plunged the military situation in the Middle East, as well as the status of the world's vital oil supplies, into crisis.

As of Monday afternoon, the price jumps had settled back to about 7 or 8 cents per gallon. But in the midst of all the chaos and uncertainty, probably the only safe bet right now is that expectations will remain volatile.

More ominously, financial markets are pricing in months of higher gasoline prices for consumers, with substantially higher costs stretching out through the summer and into early fall.

And higher fuel prices, naturally, feed through into the costs of everything that uses energy, from deliveries and services to manufactured goods.

The big winners on Monday were multinational oil companies, whose stocks surged on the expectation of higher prices, and bigger profits, for many months to come.

Meanwhile, long-term interest rates also rose, as investors braced themselves for another surge in inflation. Five-year inflation forecasts in the bond market edged up to 2.42%.

The good news is that if President Donald Trump and Israeli President Benjamin Netanyahu destroy Iran's political and military infrastructure very quickly, the economic turmoil threatened by this undeclared war may settle down. If the military succeeds in doing to Iran what the U.S. did, say, to Iraq just over 20 years ago, Iran's ability to interrupt oil supplies through the Strait of Hormuz or lob missiles at Dubai or Tel Aviv should evaporate.

Oil prices rocketed briefly last June when Israel launched its 12-day war on Iran, but then came back down quickly.

Either way, this creates a political messaging nightmare for the Republican Party going into the fall's midterm elections. How do you campaign on "affordability" if you just pushed up prices?

It's not even a week since Trump was boasting during his marathon State of the Union address that he was bringing down prices, and "especially energy" prices, to help regular Americans.

The Democrats' policies "created the high prices," he told Congress. "Our policies are rapidly ending them. We are doing really well. Those prices are plummeting downward."

And he added: "Nobody can believe when they see the kind of numbers, and especially energy, when they see energy going down to numbers like that, they cannot believe it," he said. "It's like another big tax cut."

If falling gas prices are a tax cut, rising gas prices are obviously a tax hike. This isn't a clear message for the voters.

The president - exaggerations aside - wasn't completely wrong about consumer prices during his speech. No, overall prices haven't actually "come down" on his watch: The official consumer-price index has risen 2.4% since January of last year. But during the same period, average hourly earnings have risen 3.7%, so affordability has improved.

(Naturally, there are a couple of obvious caveats: For example, inflation began falling from the summer of 2022, not from January 2025. And the president's demand that the Federal Reserve slash short-term interest rates hindered, rather than helped, the fight.)

But it's not all bad news. For example, the executives running big oil companies have seen their own personal "affordability" numbers just go up, big time, thanks to the surge in oil prices, which have likely raised the value of their equity compensation.

And higher oil prices, if they are sustained, will end up depressing consumer spending. If the economy does badly enough, and lots of people lose their jobs, those prices really will have to come down - great news on "affordability" for those still working.

-Brett Arends

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March 02, 2026 16:33 ET (21:33 GMT)

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