President Donald Trump’s war with Iran has cost the United States nearly $40 billion, consumed as much as two-thirds of some critical U.S. missile interceptors and is expected to push inflation higher into next year, according to a new report from the nonpartisan Congressional Budget Office.
The CBO on Tuesday released its first projections for the war — launched by the U.S. and Israel in February and intended to last a few weeks — finding that the conflict had directly cost the U.S. $38.1 billion through Aug. 1 and will continue to cost roughly $2 billion to $3 billion each month. Those costs could rise during periods of heavier fighting.
More than half of the cost so far — $21.7 billion — comes from replacing munitions, including $13.1 billion worth of missile-defense interceptors. The CBO estimates the U.S. has used between half and two-thirds of its inventory of Patriot, Terminal High Altitude Area Defense, Standard Missile-3 and Standard Missile-6 interceptors since June 2025.
The CBO said that leaves the U.S. with fewer munitions available for a potential conflict, including one involving China and Taiwan, and that rebuilding those stockpiles could take five years or longer.
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The estimate comes a day after the Pentagon inspector general’s office released its first assessment of the war, which also warned the fighting had created “strategic inventory shortfalls” and prompted the Pentagon’s weapons buying directorate to “streamline procurement processes and production lead times, and to stockpile critical materials, components, and selected munitions to respond rapidly to a contingency.”
U.S. Central Command told the inspector general that Iranian strikes had damaged and destroyed hundreds of buildings and structures at U.S. bases in Kuwait, Bahrain, Qatar, the UAE, Saudi Arabia, Iraq, Oman and Jordan during the conflict. Dozens of U.S. aircraft have been destroyed or damaged during the operation, the inspector general also reported.
The CBO said its $38.1 billion estimate carries “considerable uncertainty” because the Pentagon did not respond to the agency’s requests for information, forcing it to rely instead on government databases and public reports. The Pentagon’s lack of cooperation also prevented the CBO from estimating the cost of repairing or rebuilding damaged U.S. bases.
Defense Secretary Pete Hegseth and Trump have denied reports of munitions shortages. Trump said in a Monday social media post that the U.S. is producing and delivering weapons at record levels, two weeks after claiming the country had “virtually unlimited” amounts of munitions.
Beyond the cost of the military operations, the CBO expects the war to add roughly half a percentage point to inflation in the first quarter of 2027, driven largely by higher energy prices caused by supply disruptions in the Strait of Hormuz and the Red Sea.
The higher inflation is also pushing up borrowing costs, the CBO found. The agency estimates the war has raised short-term interest rates by roughly 0.2 percentage points compared with its prewar forecast and expects the short- and long-term rates to remain elevated.
On Monday, the yield on the 10-year Treasury note nudged past 5%, its highest level since 2007. Economists fear higher interest rates could lead to slower economic growth, less business investment and wage growth, and higher mortgage rates that paralyze the housing market — as well as higher interest rates for the federal government.
The CBO’s findings put an authoritative congressional estimate on the mounting costs of the conflict, which is now more than six months old. Although the CBO is Congress’ nonpartisan budget and economic analysis arm, the report was requested by congressional Democrats and lands just weeks before November’s midterm elections, as Democrats are attacking their opponents over rising gas prices and other economic shocks from the war.
While the global economy has resisted the most dire projections, costs have risen for consumers and businesses. After recent attacks on oil facilities and ships, oil prices surged — the price of a barrel rose past $100 this month — adding to the cost of everything from producing and transporting food, medicines and household goods to daily commutes and air travel.
The CBO expects oil prices to be 41% higher this year than it had forecast before the war began in February.
The White House and the Pentagon did not immediately respond to requests for comment.
Trump has disputed that the Iran war is chiefly responsible for the surge in diesel prices, instead saying in a social media post Monday, “The World’s Diesel price rise is mostly caused by the Russia/Ukraine War, not Iran.”
Claudia Sahm, the chief economist at New Century Advisors, said that higher diesel, shipping and other energy costs are spreading throughout businesses’ supply chains, but it can take about a year for those costs to work their way through the economy. Businesses can absorb some of those costs for a while, but over time, they face greater pressure to pass them along to consumers, she said.
“It’s not a matter of whether energy is creating cost in the economy or not. It’s just who’s going to be the one at the end that really foots the bill,” Sahm said.
Jessica Riedl, an economist with the Brookings Institution, said ahead of the report that she expected the CBO to project slower growth, higher inflation and higher interest rates. If energy prices continue to keep inflation elevated, borrowing costs could stay high, making it harder for businesses to invest, families to buy homes and the federal government to finance its debt.
All that could have consequences on Capitol Hill, where lawmakers are debating billions of dollars in additional defense and domestic spending, Riedl said. A warning about the economy could slow momentum for any proposals that would add to federal deficits, including plans to boost the Pentagon budget and Trump’s proposal to pay every American adult $5,000.
Hegseth, under questioning from lawmakers last month, said the latest estimate of the cost of the Iran war was $37.5 billion — an $8.5 billion increase from the number he gave in May, just before Trump negotiated a temporary ceasefire with Iran. The Trump administration is requesting as much as $70 billion in emergency military spending to cover the cost of the war and more, as part of a near-$90 billion supplemental spending package.
The CBO noted that only $42.3 billion of the Pentagon’s portion of the emergency spending request appears directly related to the war. The administration also included $12.1 billion in classified programs, which is large compared with similar requests during the Iraq and Afghanistan wars, the report noted.
In July, House Republicans rammed through a budget resolution with $73 billion for the Pentagon and intelligence agencies, largely for the Iran war. It’s stalled in the Senate, which lacks the votes to pass the measure.
“My guess is that a difficult CBO report would probably give more members cold feet when it comes to policies that increase deficits,” Riedl said. “Both the 40% defense hike and the tax rebates both face a pretty uphill battle on the Hill even before the CBO fires a warning shot about a weakening global economy.”
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