Trump’s strikes on Iran could cost American economy as much as $210 billion, top budget expert says

As the United States enters its fourth day of the epic Operation Fury, a sweeping military campaign against Iran launched in partnership with Israel, the economic toll on American taxpayers is starting to come into focus among budget watchers in the Beltway and in academia. Kent Smetters, director of the Wharton Budget Modeling (PWBM) at the University of Pennsylvania and one of the nation’s foremost fiscal analysts, said the total economic cost of the strike could be as high as $210 billion.​

Smetters, whose models are widely used in Washington, D.C., to analyze the fiscal and macroeconomic effects of federal policy, has experience with Beltway policy, including as an economist at the Congressional Budget Office and as deputy assistant secretary for economic policy at the U.S. Department of the Treasury. He has advised Congress on dynamic scoring and consulted with bipartisan policymakers on major tax and spending legislation. Smetters described the PWBM as a “sandbox” for lawmakers to discuss economic policy ideas.

The smallest number he gave wealth When asked about the cost of Epic Fury to taxpayers, the lowest estimate of direct budget costs was $40 billion, with the highest estimate being $95 billion. He said PWBM assumes more upside risk in the Epic Fury scenario, so direct military action and the cost of replacement equipment, ammunition and other supplies could result in $65 billion in direct losses to taxpayers. “If the war continues for more than two months, then this number will rise,” he added.

In addition to direct military spending, Smetters expects the United States alone to suffer approximately $115 billion in additional economic losses, with an uncertainty range stretching from $50 billion to $210 billion. “again, [there’s] He noted that the upside risks outweigh the downside risks. This broader economic impact has led to the disruption to trade, energy markets and financial conditions that typically arises from ongoing conflict in the Middle East.​

These figures do not include the cost of the government’s IEEPA tariff regime, which PWBM puts separately at $179 billion. After the Supreme Court rules on the legality of IEEPA tariffs, this amount may need to be refunded to U.S. companies (if not taxpayers).

The conflict began on February 28, when President Trump authorized the epic Operation Fury, a joint U.S.-Israeli military campaign targeting Iran’s ballistic missile infrastructure, naval power, and nuclear program. Iran’s Supreme Leader Ayatollah Ali Khamenei was confirmed dead shortly after by Iranian state media.

Trump cast the action as a necessary response to what he called Iran’s “imminent nuclear threat” and said the United States had exhausted diplomatic options after Iran “rejected all opportunities to abandon its nuclear ambitions.” The White House described the attack as “precise” and “overwhelming” and Trump vowed to “destroy Iran’s missile capabilities” and ensure Iran “never acquires a nuclear weapon.”

By the third day of the campaign, at least four U.S. troops had been killed and Trump said on Monday the operation could last “four to five weeks,” though he acknowledged it could last longer and declined to rule out the deployment of ground troops. The prospect of a protracted conflict significantly increases financial risk, as Smetters’ model assumes costs rise sharply over two months. wealth reported before The United States may run out of ammunition quickly, as previous wargames have shown only a week’s worth of ammunition, although the exact number is classified.

Elaine McCusker, a former senior Pentagon budget official now at the American Enterprise Institute, previously told the Washington Post that even before the first bomb dropped, the Pentagon’s pre-strike military buildup cost taxpayers an estimated $630 million. wall street journal. Redeploying a dozen Navy ships and more than 100 aircraft to the Middle East drives much of the spending, though McCusker said those costs will likely be absorbed within the Pentagon’s existing $839 billion budget for fiscal 2026.

The cost of the war has drawn intense scrutiny from Capitol Hill. A Reuters/Ipsos poll over the weekend found that only a quarter of Americans expressed support for a U.S. strike on Iran, including only a quarter of Republicans who believed Trump was too willing to use military force. With public opinion divided and fiscal conservatives increasingly concerned about the federal deficit, economic forecasts from the University of Pennsylvania’s Wharton School of Business are likely to spark a fierce political debate over who ultimately bears the costs of a conflict that has no clear end date.​

Smetters offers a warning about how the costs of war are often calculated. “One of the problems I have with war costings is that they do ignore counterfactuals,” he said dismissively. “If Iran does have nuclear weapons, we may spend more on military or even urban repairs later.”

This story originally appeared on Fortune.com