A-Infos (en) Italy, FAI, Umanita Nova #12-26 - Tariffs, the dollar, and the energy shock. The Iran war as a crisis in (ca, de, it, pt, tr)[machine translation]Trump's political economy.

For the United States, the war in Iran does not constitute a simple 
external event that adds to an otherwise stable economic balance; 
rather, it functions as a revealer of contradictions already inherent in 
the economic-political configuration of the Trumpian cycle. At least 
three lines of tension converge in this configuration: the return of an 
inflationary dynamic that has not been fully reabsorbed, the recourse to 
tariffs as an instrument of commercial and industrial policy, and the 
persistent ambivalence of a strategy that aims at a relatively weak 
dollar without being able to fully discipline the logic of global 
markets.[1]In this sense, the war does not only produce an increase in 
the price of crude oil: it reconnects energy prices, import costs, 
inflation expectations, interest rates, financial markets and political 
consensus, bringing out the structurally unstable nature of the entire 
system.[1][2]

The first transmission channel is naturally energy. Since the beginning 
of the war, Brent has risen by more than 50%, with peaks above 119 
dollars a barrel; in a central scenario collected by Reuters among 
analysts, the average price could be around 134.62 dollars, while in a 
more serious scenario, with damage to Iranian export infrastructure, it 
could reach or exceed 150 dollars.[2]The explanation for this violence 
is not cyclical but structural: approximately 20% of the world's oil and 
gas flows pass through the Strait of Hormuz, so even a partial 
disruption translates into a rapid rewriting of international energy 
prices.[2]The war shock, therefore, is not confined to the Middle 
Eastern theatre, but is universalised through the transport, insurance, 
refining and speculative expectations systems.[2]

In terms of the geographical distribution of costs, the asymmetry is 
clear. The US Energy Information Administration estimates that in 2024, 
approximately 84% of crude oil and condensate transiting through Hormuz 
was destined for Asian markets, with China, India, Japan, and South 
Korea together accounting for 69% of these flows.[3]The International 
Energy Agency confirms that, even for liquefied natural gas, Asia's 
weight is dominant: in 2025, almost 90% of LNG transiting through Hormuz 
was destined for Asia, while just over 10% went to Europe; however, this 
share still represented approximately 7% of total European LNG 
inflows.[4]This leads to a theoretically relevant distinction: Asia pays 
above all the material cost of the vulnerability of the routes, while 
Europe pays above all the macroeconomic cost of expensive energy, i.e. 
inflation, stagnant consumption, pressure on public budgets, and 
monetary tension.[3][4]

This second aspect has been made particularly clear in the most recent 
European assessments. According to European Commissioner Valdis 
Dombrovskis, even a brief disruption in energy flows could subtract 
around 0.4 percentage points from the Union's growth in 2026 and add up 
to 1 point to inflation; in a more prolonged scenario, the damage could 
reach 0.6 points of lost growth in both 2026 and 2027.[5]The war in 
Iran, therefore, does not only act as an energy supply shock, but as a 
stagflationary device, because it combines an increase in prices and a 
compression of economic activity.[5]In this sense, it differs from a 
purely recessionary shock or a purely inflationary shock: it produces, 
more radically, a crisis of coordination between monetary policy, fiscal 
policy and trade policy.[5][6]

The transition from energy markets to domestic prices occurs through a 
double chain: producer prices and consumer prices. On the producer price 
side, energy is reflected in transportation costs, chemicals, 
fertilizers, logistics, metals, and semi-finished products; on the 
consumer price side, it first appears in gasoline, diesel, utility 
bills, and food, before spreading to industrial goods and services. 
Reuters reported that in the United States, import prices increased by 
1.3% in February 2026 on a monthly basis, the highest figure in almost 
four years; even more significantly, core import prices, excluding fuel 
and food, recorded an annual increase of 3.0%.[7]This data indicates 
that the increase cannot be reduced to a simple "oil effect": it 
reflects a broader transmission of imported costs to the entire 
production system.[7]

This is precisely where the question of tariffs comes in. If the war in 
Iran reignites energy inflation, tariff policy makes it more persistent 
and less absorbable. Jerome Powell has stated that between half and 
three-quarters of the inflation still exceeding the target depends on 
the effects of tariffs, and that it remains uncertain to what extent the 
Federal Reserve can "look beyond" the current energy shock as if it were 
a transitory phenomenon.[1]The theoretical point is relevant: the 
tariff, politically presented as a measure to protect domestic 
manufacturing, actually also behaves as an indirect tax on imported 
goods, components and intermediate goods. When this mechanism is 
combined with a sharp rise in energy prices, the result is not only an 
increase in prices, but their greater stickiness. The shock does not 
dissipate quickly; rather, it tends to settle in margins, price lists, 
expectations and the pricing choices of companies.[1][7]

The most recent OECD macroeconomic scenario also confirms the 
persistence of the inflationary framework. In its March 2026 interim 
report, the organisation estimates that G20 inflation in 2026 will be 
1.2 percentage points higher than expected, reaching 4.0%, before 
falling to 2.7% in 2027 with the easing of energy tensions.[6]This is 
not a marginal quantitative detail: a revision of this magnitude signals 
that the interaction between expensive energy, trade tensions and 
geopolitical instability no longer produces episodic inflation, but a 
condition of prolonged fragility of the disinflationary process.[6]The 
war in Iran, therefore, does not create inflation ex nihilo in 2026, but 
is grafted onto a context in which disinflation had already been made 
more difficult by protectionism, increases in imported costs and the 
fragility of logistics chains.[1][6]

The dollar problem further complicates the picture. In terms of 
political economy, Trump's preference for a relatively weaker dollar 
responds to a neo-mercantilist logic: favoring exports, reducing the 
competitive advantage of imports, and supporting domestic production. 
But this preference clashes with the dollar's systemic function as a 
safe haven. Reuters reports that the dollar index rose by 2.57% in March 
2026, the largest monthly increase since July 2025, precisely because of 
the increased demand for safe havens connected to the war.[8]A 
structural paradox ensues: the White House may politically desire a 
weaker dollar, but a war in the Gulf restores the dollar's centrality as 
the currency of global fear, removing it from immediate political 
governability.[8]

Added to this is a second, temporal paradox. Reuters observes that the 
previous weakness of the dollar had already contributed to the increase 
in import prices; now, however, the phase of strengthening of the dollar 
does not eliminate the problem, but rather recodes it in terms of 
financial constraints and pressure on interest rates.[7][8]The past 
weakness has fueled imported inflation; the present strength, produced 
by the flight to safety, makes financial conditions more onerous and 
signals that the crisis has shifted from the level of prices alone to 
that of the overall stability of the cycle. In other words, the dollar 
does not offer a way out: first it contributes to the increase in import 
prices, then it revalues as a symptom of systemic fear.[7][8]

Against this backdrop, the Federal Reserve finds itself in a 
particularly difficult position. Several central bank officials have 
warned that the conflict increases the risks for both inflation and 
growth. Anna Paulson has stressed that public opinion, after years of 
attention to prices, has become more sensitive to shocks in fuels and 
fertilizers, and that inflation expectations, while remaining formally 
anchored, are now more fragile.[9]Thomas Barkin added that inflation was 
already stuck around 1 point above the 2% target before the new surge in 
oil prices.[10]With tariffs continuing to push up commodity prices and 
an energy shock directly affecting expectations, a long war doesn't just 
raise gasoline prices: it reduces the scope for rate cuts, prolongs high 
interest rates, and transmits uncertainty to bond and credit 
markets.[1][9][10]

The social effects of this dynamic are already measurable. According to 
Reuters, the University of Michigan's consumer confidence index fell to 
53.3 in March 2026, from 56.6 in February, while the average price of 
gasoline rose to $3.98 a gallon; in the same context, one-year inflation 
expectations rose to 3.8%.[11]Here, the conflict translates into a form 
of implicit and regressive taxation: it erodes disposable income through 
fuel, logistics, food, the cost of imported goods and, indirectly, 
interest rates. War is thus internalized in everyday life not as an 
abstract geopolitical category, but as a worsening of the material 
standard of existence.[11]

From this perspective, the issue of energy extra-profits is not 
secondary. Reuters has calculated that the five major Western 
companies[BP, Chevron, Exxon Mobil, Shell and TotalEnergies ed.]returned 
over 111 billion dollars to shareholders in 2023 alone, despite the 
reduction compared to the peak in 2022.[12]This shows that a significant 
share of the energy rent generated by the crisis cycle is converted into 
dividends and buybacks, while the cost of the adjustment falls on 
families, energy-intensive companies and public budgets. From this 
perspective, war is not only a price multiplier: it is also a mechanism 
of regressive redistribution, which socializes the costs and privatizes 
a significant part of the benefits.[12]

If, therefore, one wonders why Trump cannot continue the war in Iran for 
long from an economic point of view, the answer must be sought in the 
interaction of these factors. High oil prices contradict the promise of 
a controlled cost of living; tariffs prevent the inflation of goods from 
being quickly reabsorbed; the safe-haven dollar escapes the political 
will to weaken it; the Federal Reserve, faced with inflation still above 
target and more unstable expectations, has less room to loosen rates; 
finally, consumers experience the war as more expensive fuel, more 
onerous mortgages and a reduction in purchasing 
power.[1][2][7][8][9][11]A long war, in other words, not only erodes 
strategic resources or political capital: it disorganizes the very 
coherence of Trump's economic model, founded together on the promise of 
disinflation, protectionism and political management of the exchange 
rate.[1][8]

The conclusion can be formulated in more general terms. The war in Iran 
demonstrates that, in the contemporary economy, the energy issue 
continues to represent the main mediator between geopolitics and 
material life. But it also shows something more specific: that Trump's 
synthesis of tariffs, domestic growth, and the desire to govern the 
dollar encounters an objective limit when the global energy order enters 
into crisis. Tariffs cease to appear as protection and reveal themselves 
as a factor of inflationary persistence; the dollar ceases to be a fully 
political lever and returns to functioning as a symptom of systemic 
fear; oil ceases to be an external variable and imposes itself as the 
site where economic policy loses control of its own narrative. In this 
sense, the war in Iran is not only an international crisis: it is the 
point at which the political economy of Trumpism is subjected to its 
harshest material test.[1][2][8]

Peter Stara

Notes

[1]Reuters, Powell says tariffs keeping inflation elevated, Fed watching 
energy prices closely, 18 March 2026.

[2]Reuters, Oil prices to stay elevated across Iran war scenarios, 27 
March 2026.

[3]US Energy Information Administration, Amid regional conflict, the 
Strait of Hormuz remains critical for oil flows, 16 June 2025.

[4]International Energy Agency, Strait of Hormuz, 6 February 2026.

[5]Reuters, Iran war could mean stagflation for EU, Dombrovskis says, 27 
March 2026.

[6]OECD, Economic Outlook, Interim Report, March 2026.

[7]Reuters, US import prices post biggest increase in four years amid 
broad rise in goods, 25 March 2026.

[8]Reuters, Dollar rides haven demand as Middle East talks ring hollow, 
27 March 2026.

[9]Reuters, Fed's Paulson worried about war's impact on inflation 
expectations, 27 March 2026.

[10]Reuters, Fed's Barkin says "fog" again obscuring economic outlook, 
March 27, 2026.

[11]Reuters, US consumer sentiment slips to three-month low as war fans 
inflation fears, 27 March 2026.

[12]Reuters, Big Oil offers record returns to lure investors back, 7 
February 2024.

https://umanitanova.org/dazi-dollaro-e-shock-energetico-la-guerra-in-iran-come-crisi-delleconomia-politica-trumpiana/
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