Iran war's $37.5 billion price tag strains Pentagon budget

The US-led military campaign against Iran has cost American taxpayers $37.5 billion since late February, Defense Secretary Pete Hegseth disclosed Tuesday, as the conflict's financial toll escalates alongside its human cost.

The US-led military campaign against Iran has cost American taxpayers $37.5 billion since it began in late February, Defense Secretary Pete Hegseth told the Senate Armed Services Committee on Tuesday, as the conflict's financial toll escalates alongside its human cost.

"The administration estimates that the Iran war has cost $37.5 billion since it began in late February," Hegseth said during testimony alongside General Timothy Caine, the chairman of the Joint Chiefs of Staff.

The disclosure comes as 17 US service members have been killed in the conflict, according to Pentagon figures cited during the hearing. The war, initiated jointly by the US and Israel, has drawn comparisons to the early stages of the Iraq War, which cost roughly $80 billion in its first year adjusted for inflation, according to Congressional Budget Office data.

The $37.5 billion price tag — equivalent to roughly 0.5 percent of US GDP — threatens to strain defense budgets already stretched by competing priorities. Hegseth separately warned that US military training programs would suffer without additional funding, suggesting the administration may seek supplemental appropriations from Congress.

The cost disclosure lands as President Donald Trump vowed to bomb the facility where the Wall Street Journal reported Iran moved its centrifuge materials, escalating the military campaign. Trump said Tuesday that Iran "desperately" wants to meet despite new strikes, though he reiterated that the midterm elections would not alter his war plan, according to Politico.

Republicans are increasingly anxious over the potential ramifications of the conflict as gasoline prices rise and three additional troops died since fighting resumed, Politico reported. The political calculus has shifted as the war enters its fifth month with no clear endpoint, raising the prospect of sustained military spending that could exceed initial administration projections.

The $37.5 billion figure covers direct military operations, munitions, logistics, and personnel costs, though it does not include long-term obligations such as veterans' healthcare or equipment replacement, which historically add 30 percent to 50 percent to total war costs, according to Congressional Research Service analyses of previous conflicts.

Crude oil markets have priced in a persistent risk premium since the conflict began, with Brent crude trading above $85 per barrel as the Strait of Hormuz — through which about 21 percent of global oil supply transits — remains a flashpoint. Gold has rallied as investors seek safe havens, while the VIX, Wall Street's fear gauge, has remained elevated above 22 for extended periods during the conflict.

The last time the US engaged in a sustained Middle Eastern military campaign of this scale was the 2003 Iraq War, which ultimately cost more than $1.5 trillion in direct and indirect spending over two decades, per Brown University's Costs of War Project. The Iran conflict's trajectory will depend on whether diplomatic channels reopen or the military campaign intensifies further.

This article is for informational purposes only and does not constitute investment advice.