American Consumers Will Pay for Trump’s War with Iran
The front line for many is at the grocery store, the gas pump, and in our electronics.
By Jeff Nesbit
For weeks, the American public has closely watched the inexorable rise of gas prices, wondering if prices might go even higher. As the U.S.-Iran conflict continues to essentially block the Strait of Hormuz, the narrative has remained fixated on $100-a-barrel oil.
But beneath the surface of the energy crisis, a far more insidious economic threat is brewing. The Strait of Hormuz isn’t just a pipeline for fuel. It’s a primary artery for the raw materials that build our phones, preserve our health, and grow our food.
For the American consumer, the real Strait of Hormuz tax won’t just be paid at the pump. It will be felt in the pharmacy and the grocery checkout line as well.
The most immediate threat is to the American dinner table. Approximately one-third of the world’s fertilizers traded by sea, including urea and potash, are currently stranded behind the blockade. This disruption has arrived at the worst possible moment: the northern hemisphere’s spring planting season.
In the Midwest, farmers are facing a brutal calculus. With urea prices jumping about 50%, the cost of planting corn (a nitrogen-heavy crop) is skyrocketing.
This isn’t just a problem for farmers. It’s a precursor to higher prices for beef, poultry, and pork, all of which rely on corn for feed. With no real end in sight for the war, we’re looking at a scenario in which a maritime blockade in the Persian Gulf dictates the price of a gallon of milk in Ohio.
Further into the typical U.S. household, the tech sector is bracing as well. Qatar, for instance, accounts for roughly 30% of global helium capacity, a resource that is currently offline because of infrastructure damage that could take years to repair.
Though often associated with birthday balloons, helium is the lifeblood of high-tech manufacturing. It’s a critical coolant for the semiconductor wafers used in everything from smartphones to EVs.
What’s more, it’s essential for MRI scanners. Every scan evaporates a portion of a machine’s 1,000-liter helium reserve. Without a steady supply, the cost of life-saving diagnostic imaging could climb, adding new strain to an already burdened healthcare system.
The manufacturing ripples extend even further. The closure has effectively interrupted a massive portion of the world’s aluminum and plastics production.
In the United States, companies such as Dow are already signaling price hikes for polyethylene (the plastic used in everything from food packaging to textiles) to keep pace with soaring input costs. Combined with a 5% jump in aluminum futures, the cost of producing everything from soda cans to truck parts is rising.
This is basically pass-through inflation, hitting American consumers directly in their pocketbooks and checking accounts. When the cost of the bottle and the can goes up, the consumer is the one who ultimately settles the bill.
Even our medicine cabinets aren’t immune. The Gulf region produces roughly 6% of global petrochemicals, which serve as the building blocks for essential pharmaceuticals, including antibiotics and vaccines.
With shipping hubs like Dubai in disarray, the flow of generic medicines to the United States and elsewhere is facing unprecedented friction.
Even the clothing on our backs is caught up in the downstream effects of the U.S.-Iran conflict. As synthetic, petroleum-based fabrics become more expensive, traders are piling into cotton futures.
The closure of the Strait of Hormuz is a reminder of just how tightly the modern economic and consumer world are intertwined. All sorts of commodities — which determine the costs of things we buy every, single day — are now more expensive thanks to Donald Trump’s war with Iran.
We’re no longer dealing with a localized conflict or a simple energy shock. We’re witnessing the systematic deconstruction of the global supply chain.
Though the military focus remains on the waters in the Strait of Hormuz, the economic fallout is moving inland, affecting the most basic necessities of American life.
Trump’s war may be taking place thousands of miles away. But for the American consumer, the front line is here, now, at our grocery stores, pharmacies, gas stations and consumer electronics stores.
Jeff Nesbit was the public affairs chief for five Cabinet secretaries or agencies under four presidents.
Ultimately we have to do something about not just Hormuz but the many other global chokepoints (Red Sea, Malacca, ...).
The pharmaceuticals affected aren’t just antibiotics and vaccines but also medications used to prevent rejection in organ transplant patients. Even some raw materials used in the manufacture of pharmaceuticals may affect companies in the United States.