Over the weekend, President Donald Trump launched a war against Iran, killing Iran’s Supreme Leader Ayatollah Ali Khamenei. These U.S. attacks could continue to escalate, as Trump said on Monday that his military campaign is expected to last four to five weeks, but could “go far longer than that.”
As the conflict causes uncertainty in global markets, such volatility can extend to the price of everyday groceries and gas, too.
Trump’s latest decisions are expected to have wide-ranging economic fallouts for American consumers. Oil and natural gas prices have shot up this week as stock markets have tumbled. U.S. shoppers have also been experiencing the effects of Trump’s tariffs imposed in the wake of the Supreme Court ruling last month.
Here’s what you can expect to go up in your household expenses in the coming weeks and months, according to economic analysts:
Expect gas prices to rise.
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The Trump administration’s war against Iran is likely to come with rising gas prices at the pump. About one-fifth of the world’s oil goes through the Strait of Hormuz, a waterway off Iran’s coast.
QatarEnergy said Monday that it would stop producing liquified natural gas and related products after military strikes on its sites, causing European natural gas prices to spike.
Because there is “now the threat of attacks, ships have decided that they can’t do it,” and go through the strait, said Patrick De Haan, head of petroleum analysis at price-tracking website GasBuddy. “So that’s upending the flow of oil into the market, and that’s causing oil prices to jump.”
The average U.S. price for a gallon of regular gas was $2.99 on Monday morning, six cents higher than a week ago, according to a AAA survey of nationwide gas stations. According to GasBuddy’s live tracker, it’s $3.10 per gallon on Tuesday morning.
Tom Kloza, an independent oil analyst, said he expects gas prices to average between $3.25 and $3.50 by the end of March. “This is going to happen very quickly,” he said. Half of this price increase is attributable to higher seasonal gas production costs in warmer months and “half of it will be attributable to this war.”
De Haan said he also expects gas prices to be between $3.25 and $3.50 by the end of this month, and to keep rising on a weekly basis until mid-May.
“If there’s escalation by either side, oil prices could continue to go up,” he said.
Shipping costs might rise the longer the conflict lasts.
Americans are especially sensitive to fluctuating gasoline prices because they see a tangible price increase every time they fill up their cars. However, there are other possible economic costs from this war to consider.
Global diesel prices are surging, and “the economy runs on diesel,” De Haan said. “Your groceries get to the grocery store with diesel, the ship that brings your bananas from South America is diesel or marine oil.”
It’s not yet clear whether U.S. shoppers will notice a difference this month, but they could in later months if the timeline for this war becomes indefinite.
“If it lasts more than maybe a month or two, those costs will start being funneled down the stream to the end user,” De Haan said.
“I think we’re going to see the war premium for a while,” Kloza added.
Don’t forget tariffs, either. Certain household expenses will continue to rise.
As Trump continues the campaign against Iran, his global tariffs are also expected to keep raising prices that U.S. shoppers will see for household goods.
After the Supreme Court struck down his “liberation day” tariffs last month, stating they were illegal, Trump responded by imposing a 10% tariff on imports worldwide, after initially threatening to impose 15% global tariffs on top of other national security tariffs that were unaffected by the court ruling.
Trump is doing this through an executive order that enabled him to bypass Congress, but has a time limit: Under Section 122 of the Trade Act of 1974, his 10% tariff can remain in place for only 150 days.
The Yale Budget Lab, a nonpartisan policy research center, estimates that under the current tariff regime, U.S. households will lose about $800 on average if the Section 122 tariffs expire after 150 days, or $1,300 if these tariffs get extended. Goods that will be hit hardest by the Trump administration’s tariffs include metals, electronics, cars and computers.
John Ricco, associate director of policy analysis for Yale Budget Lab, said consumers could also see an overall 1% increase in food prices, with goods like sugar and cereals, which are largely imported, most affected.
For lower-income households, these small percentage increases add up. “Lower-income households, they have less money to save, which means they have to spend a higher fraction of their annual income on necessities,” Ricco said.
It’s a reminder that Trump’s decisions have financial costs for consumers. It remains to be seen exactly how much Americans will pay.
“The effects of the recent situation with Iran have a potential for really affecting gas and energy prices that might be much more noticeable to consumers than tariffs would be,” said Carola Binder, an associate professor at the University of Texas at Austin School of Civic Leadership. “It’s hard to notice right away a 1% increase in the price of something, but you notice for gas.”