President Trump said Wednesday that the ceasefire with Iran is “over” and promised a new round of attacks in retaliation for Iranian attacks on three oil tankers in the Strait of Hormuz this week. Hours later, the United States bombed Iran for the second night in a row.
“I think it’s over,” Trump told reporters gathered at the NATO summit in Ankara, Turkey. “I don’t want to deal with them anymore. They’re scum.” Trump added that he thinks the Iranians are “led by sick people” who are “vicious, violent people” and “cuckoo.”
Trump said he planned to continue bombings that began Tuesday night, and perhaps seize Kharg Island, a key transit point for Iranian oil, as well as reinstitute an embargo on Iranian oil exports. At the same time, Trump said the recent U.S. bombings do not mean that “long-term” military action would resume — leaving most observers wondering what the status of the war actually is.
Global economic cost: The bombing and Trump’s apparent rejection of the ceasefire sent oil prices sharply higher Wednesday and raised new concerns about the fiscal and economic cost of Trump’s war, which began in February when U.S. and Israeli forces attacked Iran and killed much of its leadership.
The International Monetary Fund warned Wednesday that the global economy is poised to slow significantly, due largely to the destruction of energy infrastructure in the Persian Gulf. In April, the IMF reduced its estimate of the global 2026 growth rate from 3.5% to 3.1% due to the war. Now it is further reducing that estimate to 3.0%.
The IMF said the global economy had weathered the initial weeks of war better than expected, although inflation had taken a toll, with energy prices 25% higher than before the war and expected to remain elevated. Discussing the report, which was written before the recent flare-up of hostilities, an IMF analyst noted that there is considerable uncertainty. “A renewed escalation in the conflict could reignite commodity price volatility, tighten financial conditions, strain policy buffers, and worsen food insecurity in low-income countries,” Petya Koeva Brooks, deputy director of the IMF's research department, told reporters, per Reuters.
Rising fiscal costs: In May, Pentagon officials told Congress that the Iran war had cost roughly $29 billion up to that point, but some experts believe that the cost was likely considerably higher and has only risen in the weeks since. Last month, the Pentagon requested $67 billion in supplemental funding for the war, indicating that costs have indeed been considerably higher, even though additional details have been scarce.
Stephen Semler, a contributor to the Costs of War project at Brown University and a co-founder of the Security Policy Reform Institute, a think tank that works to have U.S. foreign policy better serve working-class interests, released an analysis Wednesday that estimates that the war has cost $103.3 billion through the first 120 days, up until late June.
Semler based his estimate on costs directly associated with the war, “including operations, personnel, and matériel.”
The estimate – which Semler notes is “larger than all but three countries’ military budgets” – breaks down as follows:
- Military operations: $28.5 billion;
- Weapons used: $46.7 billion;
- Destroyed or damaged assets: $20.3 billion;
- Costs to non-military agencies: $4.8 billion;
- Subsidies for Israel: $2.9 billion.
Semler said his analysis leaves out indirect costs of the war, which will include interest on the increased debt incurred, since Congress does not seem interested in offsetting the cost through tax increases or spending cuts. “War is never paid for when you fight it,” House Appropriations Committee Chair Tom Cole said in March. “We didn’t pay for World War II or Korea or World War I ... so I don’t think [the cost of the Iran war] should be offset.” (Semler notes that Cole is wrong as a matter of history, since Congress raised taxes sharply during the major wars he cites.)
Taking the direct and indirect costs into account, estimates of the overall cost of the Iran war soar into the hundreds of billions. Linda Bilmes, an expert on public finance at Harvard University, said in April that she expects the final cost to top $1 trillion.
“Wars always cost more than expected,” Bilmes said in an interview with the Harvard Kennedy School at the time. “Throughout history, those who get into wars tend to be optimistic about the cost and about the length of time it will take. For example, Russia thought it could take control of Ukraine in a few weeks. President George W. Bush fired his economic advisor, Larry Lindsey, for predicting that the Iraq War might cost $200 billion (it ended up costing $5 trillion). We see the same pattern with Iran.”