The War Is Colliding With Trump's Economic Priorities

“Aung Min Tun drives a delivery van up to 500 miles a day, so he was thrilled when gas prices began to drop after President Trump took office last year. Overnight this past week, he watched them rise to $3.39 a gallon from about $3 at gas stations he visited in Illinois.

 

"I'm just a little concerned," Tun said. His one-man business should be fine if prices stay below $3.50 a gallon. Any higher and it will hurt, he said. Above $4.50, "I could not run the business."

 

Trump's pledges to lower prices and to keep the U.S. out of foreign wars helped usher him in to a second term. Yet in advance of the 2026 elections, foreign interventions have dominated the White House's recent focus -- and cast fresh uncertainty on a fragile economy. Conflict with Iran is creating domestic challenges that lawmakers and Republican strategists didn't anticipate coming into the elections.

 

"The longer this goes on, the worse it is politically, full stop," said Republican strategist Matthew Bartlett, a first-term Trump appointee to the State Department. Trump is zeroed in on international affairs at the expense of domestic political strategy, he said.

 

 "'America first' has now turned into America strikes first."

 

The U.S. economy and labor market cooled in 2025 after big jolts, including Trump's tariffs and a government shutdown.

 

The job market rebounded in January but stumbled again in February as the economy lost 92,000 jobs. Recent months brought a few hopeful signs, including low gas prices, which helped cool the annual inflation rate. This past week, the 30-year fixed-rate mortgage dropped below 6% for the first time in 3 1/2 years, giving a potential boost to the long-suffering housing market just before the important spring selling season.

 

Less than a week into the conflict, new cracks are emerging. U.S. gasoline prices are up and markets are down. The attacks on Iran have halted a weekslong rally in U.S. government bonds, pushing up the yield on the benchmark 10-year Treasury note, which plays a big role in determining mortgage rates and other borrowing costs nationwide. Mortgage rates ticked back up on Thursday to 6%.

 

A sustained Mideast war could deepen the impact, potentially causing inflation to rise -- or stoking anxieties that could damp consumer spending and slow economic growth.

 

"President Trump can walk and chew gum at the same time," White House spokesman Kush Desai said. "While the U.S. military continues wrecking the Iranian terrorist regime, the Trump administration at home remains laser-focused on delivering more economic relief for the American people."

 

On Thursday, Trump said his administration would soon announce new initiatives to keep down oil prices. "We had it very low, but I had to take this little detour," he said. Still, the U.S. is using the military "more than I'd like to use it, to be honest," he added.

 

A Reuters/Ipsos poll found that shortly after the strikes, about a quarter of U.S. adults supported the military campaign against Iran. The poll found 45% said their support would weaken if the U.S. saw higher gas or oil prices. Oil and gas prices jumped after the attack and continued climbing after tankers stopped flowing through the Strait of Hormuz.

 

Tun, the delivery-van driver, immigrated to the U.S. from Myanmar in 2017. He voted for Trump in 2024 and supports the president's decision to attack Iran. "I stand with the U.S. president because we came from a country with dictatorship and we know how dictatorships are," he said.

 

But Tun needs the economy to hang in there so he can pay off his debts, he said. Tun drives up to nine hours a day from state to state, often sleeping in a fold-up bed in his van. Several years ago, his wife suffered a brain injury that left her unable to work and left the family with medical debt. Tun also has some credit-card debt.

 

Voters have a "general skepticism" about involvement in the Middle East, Sen. Kevin Cramer (R., N.D.) said Tuesday. "I also appreciate the fact that Donald Trump, the populist that he is, isn't making national security decisions based on polls."

 

Democrats have been campaigning on bringing down costs ahead of this year's midterm vote. "Americans need focus on the high costs of food, not another war in the Middle East," Senate Minority Leader Chuck Schumer (D., N.Y.) says.

 

Kareem Miller, who owns a small Chicago trucking company, said drivers are reporting increases in diesel fuel costs in the Midwest. AAA's fuel price tracker shows diesel is selling for about $4.40 to $4.50 a gallon in Illinois and Ohio, up 14% to 17% from a week ago.

 

Higher diesel prices typically ripple out quickly to hit consumers, too, as grocery stores and other retailers often pay truckers' fuel surcharges and pass those costs on to shoppers.

 

Brian Grzebin, president of mortgage banking at Univest Bank and Trust in Pennsylvania, said business has been up because of lower rates, with more mortgage applications coming in and more houses on the market. But his bank's rates rose from about 6.25% to 6.375% after the conflict began this week, before falling back to around 6%, he said. How much the war affects the housing market "depends how long it lasts."

 

Mary Egan, a 61-year-old Indiana nurse who is hoping to retire at 67, noticed the value of her 401(k) fell by about $3,000 at one point this past week. "If it dropped like $50,000, I'd be like 'God, I need to get another job.' I hope we don't get there but you never know," Egan said.” [1]

 

Hormuz debacle shows that we still depend on stability of oil and natural gas supply. Unexpectedly, this stability is needed to finish the DI revolution. The more oil and natural gas Trump takes, the less of it is going to China, the higher the chances of Trump to win DI game. It is difficult to explain this to voters though.

 

As of March 2026, the situation in the Strait of Hormuz has created significant volatility in global energy markets, highlighting the continued dependence on stable oil and natural gas supplies to fuel economic and technological growth, including the digital intelligence (DI) revolution. The ongoing U.S.-Iran conflict and the effective blockade of the Strait—through which roughly 20-30% of global seaborne oil passes—have triggered a sharp surge in energy prices.

 

Here is an analysis of the situation based on developments as of March 2026:

 

    Hormuz Crisis and Global Impact: The disruption, described as an "insurance-driven shutdown" following drone strikes and increased regional conflict, has caused a potential 1970s-style energy crisis, with analysts warning of a possible global recession if the blockage lasts.

    The "DI Revolution" Link: Stability in energy markets is critical for high-tech industries and AI advancements (DI revolution), as data centers and AI workloads are placing unprecedented strain on energy grids, increasing the demand for reliable, affordable power.

    Impact on China and U.S. Strategy: China, as the world's largest energy importer, is heavily reliant on oil from the Persian Gulf and has been hit hard by the disruption, with one-fifth of its oil imports threatened. The Trump administration is leveraging this scenario to bolster U.S. "energy dominance," using the crisis to reduce the flow of Middle Eastern energy to China and potentially disrupt its economic growth.

    Political and Economic Ramifications: While the administration has sought to secure the Strait through increased military presence and diplomatic measures, the crisis has highlighted deep divisions in foreign policy. The reliance on "Peace Through Strength" to manage the crisis is a central feature of the current geopolitical landscape, aiming to enhance U.S. influence.

 

The situation remains highly fluid, with the potential for long-term shifts in global energy trade and accelerated investment in alternative energy sources to reduce reliance on volatile shipping chokepoints. This didn’t work so far, and most likely will not work soon enough for Trump.

 

1. World News: The War Is Colliding With Trump's Economic Priorities. Whalen, Jeanne; Ellis, Lindsay; Wise, Lindsay.  Wall Street Journal, Eastern edition; New York, N.Y.. 07 Mar 2026: A6.