Trump’s Tariffs Tanked 2025. Now the Iran War Threatens Even Worse Economic Pain

If you thought 2025 was rough, buckle up. That year’s economic misery, fueled by Donald Trump’s reckless tariff regime, was just the opening act. Now, the Iran war is set to deepen the pain with soaring energy costs and inflationary pressures that threaten to stall growth and choke job creation.

On April 2, 2025—dubbed Liberation Day by Trump—he proudly declared tariffs would “make America wealthy again.” Instead, the opposite happened. The stock market plunged, wiping out roughly 10% of investors’ wealth in a matter of days. The Dow dropped nearly 4,600 points, an 11% nosedive that rattled confidence. Tariffs were rolled back, reinstated, and even ruled illegal, but their inflationary damage was done.

Mark Zandi, chief economist at Moody’s Analytics, lays out the grim forecast: the Iran war’s energy shock will inflict even greater economic harm than tariffs. With the Strait of Hormuz under blockade and hostilities escalating, oil and commodity prices are surging, pushing inflation back up after a brief decline.

Employers are freezing hiring amid uncertainty, and tech layoffs continue as AI adoption reshapes the workforce. Inflation, while down from its 9.1% peak in mid-2022, stubbornly refuses to return to pre-pandemic levels. Zandi warns that the combination of higher inflation and sluggish growth—stagflation—is looming.

The Supreme Court’s decision to overturn Trump’s tariffs under the International Emergency Economic Powers Act didn’t end the pain. Trump simply reimposed tariffs under Section 232, claiming national security grounds. A Tax Foundation report estimates these levies will cost the economy 154,000 jobs and reduce long-term GDP by 0.2%.

Zandi’s latest predictions are bleak: no outright recession, but growth will fall far short of potential, job gains will stall, and unemployment will creep up. Higher fuel costs will ripple through the economy, hiking prices for deliveries, air travel, and food. Goldman Sachs warns the U.S. could run out of jet fuel by July, forcing airlines to slash flights—mirroring cutbacks already seen in Europe.

Despite these warnings, some economists remain cautiously optimistic. Bloomberg surveys predict modest job growth in April, building on a surprisingly strong March jobs report. Still, Moody’s recession odds are near 50%, Goldman Sachs puts it at 30%, and EY-Parthenon estimates 40%.

Zandi sums it up bluntly: “The U.S. economy is resilient, but just how resilient is set to be tested.” After years of Trump’s tariff follies and now a costly foreign conflict, American workers and families are bracing for more economic pain. The question is whether policymakers will learn from these disasters or double down on policies that enrich corporate cronies while leaving the rest of us to suffer.