The Trump administration and its key advisors have been privately consulting with the U.S. Treasury Secretary, the Director of the National Economic Council, and business leaders regarding military actions against Iran and subsequent ceasefire efforts. The focus has been on evaluating the potential damage to the U.S. economy and financial markets if the conflict becomes prolonged.
Kevin Hassett, Director of the National Economic Council, provided detailed advice to President Trump, emphasizing the short-term economic disruptions that could arise from war. A White House spokesperson confirmed that the administration is working closely with the business community to mitigate impacts, and that the President is fully aware of the negative economic consequences of continued military engagement.
Treasury Secretary Steven Mnuchin discussed with Trump the market reactions and the ripple effects of a protracted conflict on the economy. Should hostilities last between 8 to 12 weeks, the Treasury Department would need to prepare response measures while assessing the direct impact of rising gasoline prices on American consumers. Mnuchin noted that Asia and Europe would be most vulnerable to surges in energy prices.
Trump’s economic advisors and corporate leaders have also weighed in. Longtime Trump advisor Stephen Moore informed the White House in March that if the U.S. were to withdraw from Iran-related operations within a month and the Strait of Hormuz reopened, oil prices could fall to around $70 per barrel. Currently, the strait remains closed, making such a price drop unlikely.
JPMorgan Chase CEO Jamie Dimon warned that a prolonged war would severely impact oil and commodity prices, reshape global supply chains, lead to stickier inflation, and push interest rates higher. He stressed that financial markets should remain highly alert to long-term consequences. CEOs of three major U.S. oil companies recently cautioned the Energy Secretary and Interior Secretary that a prolonged closure of the Strait of Hormuz could disrupt roughly 20% of global oil and liquefied natural gas supplies, worsening the energy crisis. The Chevron CEO highlighted that financial markets have yet to fully grasp the severity of supply constraints. Some executives privately expressed frustration with the administration’s optimistic view that the strait issue could be resolved within weeks.
Economic data and market reactions reflect these concerns. U.S. consumer prices rose 3.3% year-on-year in March, up from the previous month, largely driven by energy prices. U.S. crude oil prices surged at the opening on Monday, April 13, trading near $104.90 per barrel, up approximately 8.6% for the day. The national average gasoline price has climbed above $4 per gallon. Stock markets have also shown significant volatility in response to Trump’s statements on the war.
Rising gasoline prices have directly pushed up the energy component of inflation, with energy prices increasing substantially month-on-month in March, becoming a major driver of the higher CPI.
The Strait of Hormuz also plays a critical role in energy and agriculture. The President of the American Soybean Association indicated that the Agriculture Secretary has conveyed farmers' concerns about rising fertilizer prices directly to the President. Approximately half of the world’s urea and nearly one-third of ammonia supplies transit through the Strait of Hormuz. A prolonged conflict would significantly raise agricultural production costs, affecting food prices globally.
Oil industry executives have repeatedly emphasized the strategic importance of the strait. A long-term blockage would not only disrupt crude exports but also pose serious challenges to liquefied natural gas and fertilizer shipments, creating dual pressures on U.S. agriculture and global food supply chains.
Analysis of the U.S. dollar suggests a complex short-term outlook with bearish medium-to-long-term trends. A drawn-out war is considered a net negative for the U.S. economy, likely to weaken the dollar’s fundamental support through higher inflation, a widening trade deficit, and suppressed growth.
While the dollar may see short-term gains due to safe-haven flows, it faces systemic depreciation pressure over the medium to long term. During Asian trading hours on Monday, the dollar index edged higher, trading near 99.00, up about 0.3% from the previous close. Markets are closely watching whether the Strait of Hormuz reopens quickly—continued closure would significantly increase downside risks for the dollar.
Despite some optimistic projections, more hawkish voices persist. The President of the American Oil and Gas Workers Association argued for using military force to remove Iran’s leadership, describing war-related gasoline price increases as “temporary disruptions” and advocating more decisive action.
Within the Trump administration, there is ongoing debate weighing short-term political gains against long-term economic costs. Assessments from the Treasury and the National Economic Council indicate that if the conflict is not resolved quickly, inflation pressures, supply chain disruptions, and rising interest rates could compound into a significant shock to the U.S. economy—especially with midterm elections approaching.
Internal White House evaluations highlight that the Trump administration is well aware of the multiple risks posed by a prolonged war, including elevated oil prices, long-term dollar depreciation, heightened inflation, and increased agricultural costs. Warnings from corporate leaders underscore the critical role of the Strait of Hormuz in global energy and supply chains, while differing opinions reflect the complexity of policy decisions. Future economic performance will heavily depend on the speed of conflict resolution and the reopening of the strait.
As of 11:12 Beijing Time, the dollar index was reported at 99.03.
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