As the United States enters its seventh month of fighting with Iran it is imposing significant near and long-term costs. It’s not just the loss of US personnel and the resources expended to date, but other strategic costs are mounting and the bill will come due.

The Huge Defense Bill Is Getting Larger

There are a wide range of estimates on the war’s financial toll but all point to a significant outlay. Secretary of Defense Pete Hegseth has publicly acknowledged that the US has spent around $38 billion so far, including the cost of day-to-day operations, the forward deployment of thousands of US troops, and the expenditure of thousands of conventional and precision munitions.

This estimate, however, does not cover damage to US military and diplomatic facilities in the Middle East. News media reports indicate that nearly two dozen US military facilities in the region, along with valuable military equipment positioned in hangars and on vulnerable runways, have sustained serious damage from Iranian missile and drone strikes. Similarly, there have been multiple attacks on US diplomatic facilities since the war began, including strikes in Baghdad, Saudi Arabia and Kuwait. The price to replace damaged military hardware, including dozens of aircraft, and repair, harden, and relocate affected facilities and personnel will cost many billions of dollars.

To help defray these initial costs the Trump administration is seeking a nearly $90 billion supplemental budget, with about $67 billion to pay for Iran war costs. Keep in mind that this is on top of the Trump administration’s record-breaking $1.5 trillion defense request for 2027.

Broader Economic Hits Are Evident

Rising security costs are hardly the only financial impact of the war. For example, because of the curtailed flow of energy through the Strait of Hormuz, US gas and diesel prices are roughly 30% higher now than before the war, costing Americans an additional $500 per US household since the war began in February.

Given the collapse of the US-Iran memorandum of understanding and Iran’s ongoing campaign to assert control of the strait, most experts anticipate that commercial shipping through the strait is unlikely to reach pre-war levels for at least the rest of this year and perhaps longer, keeping oil prices high.

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