A top budget expert says Trump’s strikes on Iran could cost the American economy as much as $210 billion
As the United States enters the fourth day of Operation Epic Fury—its extensive military campaign against Iran, launched in conjunction with Israel—the financial burden on American taxpayers is starting to come into view for budget observers in Washington, D.C., and academic circles. According to Kent Smetters, director of the Penn Wharton Budget Model (PWBM) and one of the nation’s leading fiscal analysts, the total economic cost of the strikes could reach as much as $210 billion.
Smetters, whose model is widely employed in Washington, D.C., to evaluate the fiscal and macroeconomic impacts of federal policy, has deep Beltway policy experience, including a term as an economist at the Congressional Budget Office and as deputy assistant secretary for economic policy at the U.S. Treasury. He has , and advises policymakers from both parties on major tax and spending legislation. Smetters has characterized PWBM as a “” for legislators to test out economic policy concepts.
The lowest figure he provided to when queried about the cost of Epic Fury to taxpayers was $40 billion, representing the smallest estimate of direct budgetary costs, within a range that extends up to $95 billion. He stated that PWBM assumes greater upside risk in the Epic Fury scenario, so a $65 billion direct cost to taxpayers is the likely amount for direct military operations as well as the replacement of equipment, munitions, and other supplies. “If the war lasts longer than two months, this number will rise,” he added.
Beyond direct military expenditures, Smetters projected an additional economic loss to the United States alone of roughly $115 billion, with a wide margin of uncertainty ranging from $50 billion to $210 billion. “Again, [there’s] more uncertainty at the upper end,” he noted, highlighting that the upside risk is greater than the downside. This broader economic impact accounts for disruptions to trade, energy markets, and financial conditions typically triggered by a prolonged conflict in the Middle East.
These figures do not include the cost of the administration’s IEEPA tariff regime, which PWBM has estimated at a separate $179 billion. This sum will likely need to be refunded to American companies, if not taxpayers, following the Supreme Court’s ruling on the legality of IEEPA tariffs.
The conflict began on Feb. 28, when President Trump authorized Operation Epic Fury, a joint U.S.-Israeli military campaign targeting Iran’s ballistic missile infrastructure, naval forces, and nuclear program. Iran’s Supreme Leader, by Iranian state media soon afterward.
Trump framed the operation as a necessary response to what he termed Iran’s “imminent nuclear threat,” stating that the U.S. had exhausted diplomatic options after Iran “rejected every chance to abandon their nuclear ambitions.” The White House described the strikes as “precise” and “overwhelming,” with Trump vowing to “dismantle Iran’s missile capabilities” and ensure Iran would “never obtain a nuclear weapon.”
By the third day of the campaign, at least four American troops had been killed, and Trump said Monday the operation could last “four to five weeks”—though he acknowledged it might continue longer and declined to rule out the deployment of ground forces. The possibility of a prolonged conflict significantly raises the financial stakes, as Smetters’s models assume costs increase sharply beyond the two-month mark. that the U.S. may quickly deplete munitions, as previous war games suggest as little as a week’s worth of supplies, though the exact quantity is classified.
Even before the first bombs were dropped, the Pentagon’s pre-strike military buildup had already cost taxpayers an estimated $630 million, Elaine McCusker, a former senior Pentagon budget official now at the American Enterprise Institute, previously told the . The repositioning of more than a dozen naval vessels and over 100 aircraft to the Middle East drove most of that spending, though McCusker said those costs are likely to be covered within the Pentagon’s existing $839 billion fiscal year 2026 budget.
The war’s cost is already drawing attention on Capitol Hill. A conducted over the weekend found that only one in four Americans say they support the U.S. strikes on Iran—including just one in four Republicans who believe Trump has been too quick to use military force. With public opinion divided and fiscal conservatives increasingly focused on the federal deficit, the economic estimates from Penn Wharton are likely to intensify a growing political debate over who ultimately bears the cost of a conflict with no clear end in sight.
Smetters offered a note of caution regarding how war costs are typically presented. “One issue I have with cost-of-war calculations is that they truly do overlook the counterfactual,” he said, understating the point. “If Iran had actually acquired a nuclear weapon, we might have spent far more on military efforts and even city repairs later on.”