Despite previously declaring unequivocally that he would not start foreign wars, President Donald Trump’s administration has dragged the United States into an unnecessary war of choice with Iran—one without clear objectives and without the needed preparation required for successful operations. The Trump administration’s war has caused the deaths of 13 American service members and of nearly 1,500 innocent Iranian civilians and others across the region. And it has resulted in the destruction of civilian infrastructure across the Middle East, with lasting economic impacts.
At home, the Trump administration’s war is raising prices and increasing inflation, and there are signs it is also harming the economy in other ways. Indeed, as the impacts of the war in Iran cascade through the economy, U.S. manufacturers, who have already suffered tremendously from the Trump administration’s trade and economic policies, are likely to face an even more challenging environment.
Here are five examples of how the Trump administration’s war is making it harder for U.S. manufacturers to produce in the United States.
Higher cost of inputs
Few American manufacturers wholly make the products they produce; rather, they rely on complex supply chains to provide inputs such as materials and component parts to produce in the United States. According to a recent survey, U.S. manufacturers were expected to see input prices rise faster in March 2026 than at any time since pandemic-era supply shocks. Industries that rely on materials produced at scale in the Persian Gulf region are likely to face the steepest and most immediate challenges.
Nine percent of global aluminum production, for example, occurs in the Middle East, with three-quarters of it exported to the world. As a result, aluminum prices in March hit a four-year high, raising input costs for the transportation, construction, and packaging industries, among others. And prices can be expected to rise going forward, given Iran’s targeting of two of the Gulf region’s largest aluminum producers in drone attacks. Officials from one producer, Emirates Global Aluminium, said the attack caused “significant” damage to their Al Taweelah smelter.
Other commonly used inputs will be affected as well. The cost of semiconductors—a key component in modern electronics, including those used in smartphones, computers, vehicles, and medical equipment—is very likely to rise. As much as 90 percent of the world’s supply comes from Taiwan, which depends heavily on liquified natural gas (LNG) from Qatar to power its electrical grid. As the cost of electricity goes up in Taiwan due to potential scarcity issues and the increased cost of transporting and insuring LNG imports, the cost of producing semiconductors will, too. The same is true of other component parts or materials—such as electronics, computers, and machinery—that American manufacturers source from Asia and are often produced using energy or other inputs sourced from the Gulf region. Qatar, for example, accounts for 30 percent of the world’s production of helium—a key input that supports semiconductor and other industrial manufacturing.
Higher cost of freight
U.S. producers rely on freight forwarders, a third-party coordinator that provides shipping services, to obtain the components and materials they need to produce in the United States and to bring their finished goods to customers and consumers. The Airforwarders Association (AfA) recently reported that 7 in 10 of its member companies were experiencing disruption due to the Trump administration’s war with Iran. According to its survey, 29 percent of AfA members—which include freight forwarders, airlines, trucking firms, warehouse operators, and service providers—reported a significant impact from the conflict and 38 percent reported moderate impact.
$4.02 per gallon
The nationwide average for the cost of gasoline, nearly a 35 percent increase since the start of the Trump administration’s war
It is easy to see why: Since February 27, 2026, the day before the war began, the average nationwide price of U.S. diesel fuel, which is
used to power trucks and ships for the long-haul transportation of goods, has risen from $3.76 to
$5.45. Meanwhile, the
price of jet fuel, which is used for air transport, has increased 85 percent since the start of the war. Even firms that rely on regular gasoline to move goods, meet customers, or develop new business relationships are facing higher costs. The cost of gasoline has increased
nearly 35 percent since the start of the Trump administration’s war, reaching a nationwide average of $4.02 per gallon for the first time since 2022.
Supply chain shortages and delays
The Trump administration’s war with Iran is already causing supply chain shortages and delays, leaving U.S. manufacturers in a challenging position. Many goods shipped through the Persian Gulf have been rerouted or remain stuck in Gulf ports. This may sound like a minor inconvenience, but previous shipping delays have resulted in temporary plant closures and furloughs. In South Korea, some factories have already reduced output to just 20 to 30 percent of normal levels as a result of Asia’s emerging energy crisis.
The war already may be affecting the business decisions of some U.S. manufacturers. The Flash S&P Global US PMI Composite Output Index noted that war-related shipping issues were a key cause of longer supplier delivery times in March, with supply delays more widely reported than at any time since October 2022.
Even U.S. manufacturers that import goods from other markets are not immune to the consequences, as the ripple effects of the war also affect integrated global supply chains. Several other major ports around the world are facing congestion issues, with shipping companies avoiding ports and routes requiring transit through the Strait of Hormuz. According to industry reports, 60 to 70 percent of the world’s largest ports are deemed to be severely congested. Data from the freight rate marketing platform Xeneta, for example, show that on-time arrivals at Mundra—one of India’s largest container ports—have dropped from 44 percent to 31 percent, with more than 1 in 3 vessels arriving a week behind schedule. For manufacturers that rely on “just in time” supply chains, such delays can make it harder to meet agreed-upon delivery schedules.
Lower international demand for U.S. manufactured goods
American manufacturers who rely on exports to Europe and Asia are likely to find waning demand as their European and Asian customers face much higher energy costs, reducing their capacity to buy American goods. European and Asian LNG futures are up 55 percent and 88 percent respectively, suggesting that American firms are likely to see reduced demand as overseas customers reduce their spending to cover the cost of more expensive electricity. A recent report from Barron’s notes, for example, that U.S. manufacturing will remain “at risk” if the European and Asian energy shortages reduce overall demand.
Manufacturers of consumer goods, or component parts for consumer goods sold in the European market, are likely to be hit the hardest. Consumer confidence in Europe plunged to its lowest level in March since late 2023. And European CEOs are already warning that higher energy costs will reduce consumer spending and make products more expensive.
Softening consumer market in the United States
American manufacturers are likely to face slowing demand for their goods in the United States as well. Consumer sentiment neared record lows in March—a broad-based pessimism (perhaps, realism) that was echoed in a CBS News-YouGov poll conducted March 17–20, 2026, that showed Americans by a 48-point margin expect the war to make the economy weaker.
Goldman Sachs recently concluded that the economic impacts of the war in Iran would result in 10,000 fewer jobs per month through the end of the year, with only the leisure and hospitality and the retail trade sectors shedding more jobs than manufacturing. The reason? Goldman suggested that as energy prices increased, consumers would cut back on discretionary spending first. In its March earnings call, Walmart voiced similar concerns, noting that consumers were being careful in the spending choices and often trading down to save money.
Increases in the prices to date
The war in Iran has driven up prices for oil, gasoline, and fertilizer around the world. Table 1 shows the price increase as of March 31, 2026, compared with February 27, 2026, the day before the U.S. military strike on Iran began.
By the end of last week, the war had cost an estimated $25 billion and continued daily costs are estimated at around $500 million. Depending on the tempo of operations or equipment losses, some days may significantly exceed that figure.
Conclusion
The problem for American manufacturers and their workers is that none of these factors is likely to wane any time soon. Even if the Trump administration were to end this war tomorrow, the “tail” associated with the war’s devastation is likely to keep prices high, consumer confidence low, and the future uncertain. As with most of the Trump administration’s actions, it will be American workers and American small businesses paying the price.
The economic shock of the Iran war comes at a time when many American manufacturers are already struggling with higher costs and the difficulty of managing supply chains in the face of the Trump administration’s chaotic trade policies. All told, the Trump administration’s economy looks less like a “golden age” for American manufacturers and their workers and more like a time of contraction, job losses, and disapproval of the administration’s handling of the economy.
The author thanks Kyle Ross and Allison McManus for their valuable input.