Sen. Elizabeth Warren (D-Mass.) went after President Donald Trump on Tuesday over the price tag of the war with Iran, and she didn't exactly mince words. The Congressional Budget Office, she noted, estimates the conflict has cost taxpayers $38.1 billion — and she thinks even that number is generous to the administration.

What the CBO Actually Said

The CBO laid out the math in a letter to Rep. Brendan Boyle (D-PA) released Tuesday, estimating that the conflict, which began in February, has cost the Department of Defense approximately $38.1 billion as of Aug. 1.

"Trump's war in Iran has cost taxpayers almost $40 BILLION and drove nearly HALF of inflation," Warren said in a post on X, calling it "a conservative estimate" that excludes damage to U.S. bases, destroyed munitions supplies, and higher costs like gas and groceries.

Munitions made up the largest share at $21.7 billion, including $13.1 billion for missile-defense interceptors alone.

A Defense Department report released Monday put the war's cost at $33.4 billion through June 29, with munitions accounting for $22.3 billion of that total.

Why Inflation Is Feeling It

The war's main economic impact stems from reduced oil shipments through the Strait of Hormuz and disruptions in the Red Sea, which have pushed up global energy prices and, in turn, the costs of gasoline, diesel, and jet fuel, the CBO said.

The agency projected the war will add 0.3 percentage points to core inflation and 0.5 points to headline inflation by early 2027.

U.S. annual inflation held at 3.4% in August, with gasoline rising 3.9% for the month and accounting for more than a third of the overall increase, according to the Bureau of Labor Statistics.

By early 2027, gasoline and other fuels will account for about 40% of the war's effect on consumer prices, with the remainder coming from indirect increases in the cost of other goods and services, the CBO said.

At the time of writing, West Texas Intermediate crude futures were down 0.88% at $104.90 after it surged to $106.53 earlier in the day, while Brent Crude was down 0.10% at $108.36.

The national average for gasoline stood at $4.32 a gallon as of Tuesday, according to AAA, up from $3.18 a year earlier, while diesel hit $6.23 a gallon, up from $3.69 a year ago.

The Household-Level Hit

Last week, Moody's Analytics Chief Economist Mark Zandi estimated the war added $115 billion in energy costs, or roughly $860 per household, hitting lower- and middle-income Americans hardest.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by MarketDash editors.