By Patrick O'Donnell

When Richard the Lionheart led crusades to the Middle East they were funded by crippling taxes at home. President Donald Trump's war in Iran could well hit regular Americans' pockets and draw the same ire from markets.

The English king was criticized for spending most of his reign abroad while bleeding the country dry via the Saladin Tithe and plunging its people into poverty. While most Americans don't face such destitution, there is a rising fear of recession while oil prices and inflation surge as a direct consequence of the president's actions.

Goldman Sachs has adjusted three of its key economic forecasts, all of them tied to the impact of the war in Iran, as it sees faster inflation, slower growth, and higher unemployment.

The Fed did little to assuage those fears Wednesday, keeping interest rates on hold and failing to signal the cuts that could give markets some hope amid a conflict with no end in sight. It was widely expected amid the volatility caused by the conflict and the pause was followed Thursday by Japan, Europe and the U.K. -- just be glad the central bank didn't follow Australia's lead and increase rates based on what's happening in the Middle East.

But markets are now pricing in a possible near-term interest-rate hike after Fed Chair Jerome Powell warned of the uncertain impact of the conflict in the Middle East.

That added to stocks' volatility. Coming into Wednesday trading the S&P 500 was heading for its first three-day gain in a month as oil prices eased. Jump to Thursday, and the benchmark index was floundering at its lowest levels since November, having given back all of its gains for the past six months, and oil was pushing $115 a barrel.

It's an untenable situation for Trump as his approval rating slumps, according to CNN's Poll of Polls, with no sign of an exit ramp for the Middle East conflict.

And it isn't just at home where the president faces discord. Trump's tariff posturing and threats to take Greenland did little to strengthen ties across the Atlantic. His calls for help in securing the Strait of Hormuz have fallen on deaf ears.

King Richard was captured on his way back from the Middle East and ransomed for 150,000 silver marks -- approximately three times the annual income of the English Crown. Trump has tried to use trade as a bargaining chip to exert pressure on countries, which now seems to be faltering. Maybe it's time to give assurances to some of the U.S.'s former friends.

The Holy Grail for markets is stability. That's something Trump will start having to seek if the recession fears become reality.

Write to Patrick O'Donnell at patrick.odonnell@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 19, 2026 14:17 ET (18:17 GMT)

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