Washington, D.C. — A new analysis from the Center for American Progress finds that President Donald Trump’s war with Iran has driven up interest rates, increasing borrowing costs for households, businesses, and the federal government by at least $48.1 billion in 2026 alone. The analysis estimates that long-term interest rates are approximately 0.5 percentage points higher than they would have been absent the conflict, adding billions in costs for mortgages, credit cards, business investment, and federal borrowing.
The war has already raised prices for energy and transportation, fueling inflation and forcing the Federal Reserve to delay expected interest rate cuts. As a result, Americans are now paying more not only at the gas pump but also when financing a home, carrying credit card debt, or growing a business.
“Trump’s war with Iran is making life more expensive in ways that go far beyond higher gas prices,” said Christian E. Weller, senior fellow at CAP and author of the analysis. “The conflict has pushed up inflation, kept interest rates elevated, and added billions of dollars in borrowing costs for families, businesses, and taxpayers. Even with a temporary agreement in place, markets continue to expect higher inflation and higher rates for the foreseeable future.”
The analysis finds:
- Households will pay at least $4.6 billion more in mortgage, credit card, auto loan, and other borrowing costs in 2026.
- Nonfinancial businesses will face at least $12.7 billion in additional borrowing costs, making it more expensive to invest, expand, and hire workers.
- The federal government will pay at least $30.8 billion more in interest costs on new debt this year.
- Interest rates remain about 0.5 percentage points higher than they likely would have been absent the war and its inflationary pressures.
Higher fuel prices, shipping disruptions, and uncertainty around the Strait of Hormuz have fueled inflation, pushed investors to demand higher rates, and made it harder for the Federal Reserve to lower borrowing costs. As families continue to face elevated prices and affordability challenges, prolonged instability in the region could keep interest rates higher for longer, increasing costs throughout the economy.
Read the analysis: “The Interest Rate Penalty From Trump’s War With Iran” by Christian E. Weller
For more information or to speak with an expert, please contact Christian Unkenholz at [email protected].