Harvard: U.S.-Iran war could cost taxpayers nearly $1T

A Harvard Kennedy School analysis published two days before an April 8 ceasefire estimates the fiscal cost of the U.S.-Iran war that began after a Feb. 28 U.S.-Israeli strike could approach $1 trillion. The Trump administration’s tally for the first six days of fighting stands at $11.3 billion.

Harvard public policy professor Linda Bilmes, the report’s author, placed short-term combat costs at about $2 billion per day over 40 days. That figure covers munitions, troop operations and damage to military equipment. Bilmes highlighted replacement costs and higher current market prices for equipment as key reasons the total would grow well beyond initial outlays. She pointed to the loss of three F-15 fighters to friendly fire in Kuwait as an example of expensive replacements and said, “I am certain we will reach $1 trillion for the Iran war.”

The Harvard analysis says the war bill does not stop with frontline spending. Replacement purchases, interest on new borrowing, long-term veterans’ health care and infrastructure repair would add to the fiscal burden over years.

A temporary ceasefire announced April 8 remains fragile. Weekend negotiations between U.S. envoys that included Senator J.D. Vance and former White House adviser Jared Kushner and Iranian counterparts did not produce a lasting settlement.

International financial institutions have outlined scenarios where the conflict deepens global economic strain. In a worst-case projection the International Monetary Fund said sustained higher oil, gas and food prices could push world growth below 2% in 2026 and bring the global economy close to a recession. The IMF projected oil averaging about $110 a barrel this year and rising to $125 by 2027, and it warned inflation could edge up to roughly 6% next year. The IMF added that a prolonged supply shock would likely force central banks to raise interest rates again.

Pierre-Olivier Gourinchas, the IMF’s chief economist, warned that a longer conflict would lift inflation, raise unemployment and deepen food insecurity in some countries. He compared the potential oil shock to the 1970s embargo, which caused a major energy crisis decades ago.

Private-sector investors expressed similar concerns about energy and growth. Citadel CEO Ken Griffin said a shutdown of the Strait of Hormuz for six to 12 months would likely trigger a global recession. Griffin also criticized U.S. messaging and coalition-building around the campaign, arguing the administration had not secured sufficient international support.

The Harvard analysis and international forecasts identify linked fiscal and economic risks. How high the final U.S. bill will be depends on the duration of fighting, damage to oil infrastructure, the pace of military replacement purchases and how governments respond to stabilize markets and support growth.