[News] How a war with Iran (for Israel) could crash the US economy

[Anti-Imperialist News]

 How a war with Iran (for Israel) could crash the US economy

As Trump eyes war with Iran to bolster his legacy and appease his
pro-Israel backers, Tehran’s likely retaliation could crash global markets,
spike oil prices, and bring economic pain directly to the American public –
turning support for apocalyptic politics into a crisis at the checkout line.

Shivan Mahendrarajah <https://thecradle.co/authors/shivan-mahendrarajah>

MAR 21, 2025 -
https://thecradle.co/articles/how-a-war-with-iran-for-israel-could-crash-the-us-economy
Photo Credit: The Cradle

The “winds of war” are blowing toward Iran. This is the war for which
Israeli donors Sheldon and Miriam Adelson, along with pro-Israel
organizations such as AIPAC and the ADL, paid US President Donald Trump
hundreds of millions of dollars over two election cycles.

But it’s not only the Israeli lobby banging the war drums; American
Evangelicals – especially groups like “Christians United for Israel
<https://cufi.org/issues-category/iran/>” – also support war, believing it
will “save Israel” from the “Iranian menace.” Evangelical membership in the
119th Congress (2025–27) is high
<https://www.pewresearch.org/religion/2025/01/02/faith-on-the-hill-2025/>.
War with Iran is not (yet) popular in the US, but – just as with Iraq –
consent will be manufactured by Washington elites and the media.

Trump’s outreach to Russian President Vladimir Putin to resolve the Ukraine
war partly aims to shift the Pentagon’s attention back to West Asia. He
assumes that an early 2025 war with Iran will “save Israel” and secure his
legacy, letting him focus on “America First” for the rest of his term.

But war with Iran could also backfire disastrously, sink his presidency,
and derail the ambitions of 2028 Republican hopefuls like Marco Rubio and
J.D. Vance. For starters, should the military campaign encounter any
unforeseen backlash – which is highly likely, and the reason the Pentagon
has assiduously avoided direct confrontation with Iran – the Democratic
Party could retake both chambers of Congress after a US stock market crash
and recession triggered by the war.

*Iran’s military responses*

Iranian leaders have vowed “devastating” retaliation for any attack on
their soil. This would likely involve missile strikes against Israeli and
US military targets – and possibly infrastructure and economic targets
within the occupation state. If Israel uses tactical nuclear weapons
against Iran’s nuclear facilities, Tehran will escalate further.

Whether or not nukes are used, war would shock the global economy, send oil
prices soaring, and halt maritime traffic through the Strait of Hormuz
<https://thecradle.co/articles/bypassing-hormuz-saudi-arabias-pipeline-push-in-yemens-al-mahra>.
The greatest impact will fall on countries most dependent on West Asian
oil.

The US economy may be less affected in the short term. Its stock markets,
already down 10 percent since Trump’s return to the White House, would
decline further – but Trump is gambling that households will not feel the
pain. But if the Islamic Republic launches economic warfare that “brings
the war home,” political dynamics will change.

*Economic warfare*

Most Americans are detached from the notion and consequences of war
because, since the Civil War, US wars have been fought far from its
borders. Even during the World Wars, though American families faced
personal loss, the nation did not endure widespread suffering – unlike
Britain, which imposed food rationing from 1939 to 1954.

The “Global War on Terror” impacted some communities, but not the country.
US troops often joked in Iraq: “We’re at war; America’s at the mall
<https://www.cbsnews.com/news/were-at-war-americas-at-the-mall/>.”
Americans kept spending and enjoying life, while Iraqis and US occupation
soldiers endured the brutal costs.

Iranian leadership understands this disconnect. The US stock market is a
tempting target. In 1929, at the start of the Great Depression, just 2.5
percent
<https://www.federalreservehistory.org/essays/stock-market-crash-of-1929>
of Americans owned stock. Today, about 61 percent
<https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx>
of US adults – roughly 160 million people – own shares through private
accounts, pension schemes, or retirement plans.

Factoring in children in such households, roughly 200 million Americans are
exposed to market fluctuations. Trillions more dollars are invested by
corporations, universities, and foreign institutions. The exposure is deep.

The US economy is fragile. Mark Zandi, Moody’s chief economist, warned
<http://www.aastocks.com/en/usq/news/comment.aspx?source=AAFN&id=NOW.1426264&catg=1>
that the risk of recession is “uncomfortably high and rising.” On 19
March, Federal
Reserve
<https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20250319.pdf>
Chair Jerome Powell kept interest rates steady, citing slowing consumer
spending and growing uncertainty. Trump, fearing economic fallout,
raged on Truth
Social
<https://www.barrons.com/articles/trump-fed-cut-rates-powell-73997b86> over
the Fed’s refusal to cut rates. He announced retaliatory tariffs
<https://www.washingtonpost.com/business/2025/03/19/trump-tariffs-imports-liberation-day/>
set to take effect on 2 April.

Household debt is rising – $18.04 trillion as of Q4 2024 – with increasing
defaults on auto loans and credit cards. Americans, like the federal
government, spend on credit. Investors borrow against their portfolios with
margin loans. If stock values fall, forced selloffs to cover debts could
intensify market collapse. “Margin calls
<https://onlinelibrary.wiley.com/doi/10.1111/ehr.13213>” – demands for loan
repayments – played a greater role in the ensuing economic turmoil than the
13 percent market drop on 28 October 1929.

The US economy is already strained, and consumers are over-leveraged. A
large external shock could push it into a deep recession. Stock markets
would plunge, wiping out pension savings and private wealth.

How far markets fall would depend on the force of Iran’s blow. The current
10 percent drop has already hurt. A deeper decline – say, 25 to 50 percent
– would cripple the economy, spark layoffs and bankruptcies, and tighten
credit. That would suppress consumer spending and crash the housing market,
as in 2008.

*Tehran’s targets*

As Iranian leaders have often repeated, “If Iran cannot sell oil, no one
will.” If US or Israeli forces strike Iranian tankers or infrastructure,
Tehran is likely to target US economic interests and the oil sectors of any
Persian Gulf Arab state that supports the attacks by allowing fighter jets,
drones, or missiles to launch from their territories.

The Islamic Revolutionary Guard Corps (IRGC) may choose to strike Bahrain,
which is an obvious military target since it hosts the US Naval Forces
Central Command <http://www.cusnc.navy.mil/>. In addition to military
sites, Iran could target the Bahrain Petroleum Company’s refinery, which
processes 270,000 barrels per day, along with its marine terminal and oil
storage facilities.

The oil farm holds 14 million barrels – ample fuel for a dramatic strike.
Iran could also destroy the King Fahd Causeway connecting Bahrain to Saudi
Arabia to prevent Riyadh from sending ground troops to suppress unrest
among Bahrain’s majority Shia population, as it did during the 2011 uprising
<https://www.middleeastmonitor.com/20210214-remembering-the-bahraini-uprising/>
.

In Iraq, too, US military bases will almost certainly come under fire.
Beyond that, Iran-aligned factions within the Popular Mobilization Forces
(PMF) may attempt to capture the 2,500 US troops still stationed there –
not to kill them, but to take them as hostages.

Living captives would be far more valuable, creating a nightmare scenario
for Trump and serving as a sharp reminder to Americans – who often forget
the wars they once supported – that US troops remain in Iraq more than two
decades after the 2003 invasion. These POWs would likely be scattered
across the country, making coordinated rescue missions difficult and
turning them into bargaining chips in any future negotiations.

Jordan, having allowed Israeli overflights last year in October during
Iran’s retaliatory strikes
<https://thecradle.co/articles/israels-limited-counter-to-irans-massive-attack>
and before that in April <https://thecradle.co/articles-id/24421>, is
likely to do so again and could face significant retaliation. In addition
to the Zarqa oil refinery, Iranian forces might strike political, military,
and intelligence targets. Such attacks would certainly provoke unrest among
Jordan’s population, the majority of whom are of Palestinian descent and
already harbor grievances against their leadership for its collusion with
Tel Aviv.

The UAE, if complicit in the attacks, could face military strikes on its
energy infrastructure and power plants, as it experienced during its war
with Yemen. The Emirates is particularly vulnerable due to its demographic
makeup – about 88 percent of its population consists of foreign workers. If
those workers flee following targeted attacks, the country’s economy would
be brought to its knees.

Qatar and Oman are likely to be treated differently. Muscat, with its
long-standing neutral foreign policy in the region, has maintained warm
relations with Iran, and will not likely participate in a US military
aggression. Doha also enjoys relatively good relations with Tehran, though
it hosts the US Central Command's (CENTCOM) Al-Udeid Air Base and worked to
thwart Iranian interests in Syria. Iran might strike CENTCOM's headquarters
in West Asia, but is unlikely to target other Qatari assets.

Saudi Arabia presents a more complex scenario. Although both Russia and
China have encouraged reconciliation
<https://thecradle.co/articles/iran-and-saudi-arabia-a-chinese-win-win>
between Iran and Saudi Arabia, the kingdom may not remain on the sidelines.
If it does participate in hostilities, it would become a high-priority
target.

Even if Riyadh stays neutral, Iran might still strike its East–West oil
pipeline, which terminates at the port of Yanbu. That pipeline – built in
1982 to bypass the Persian Gulf – delivers over three million barrels per
day to Europe.

Yanbu’s port, refinery, and export terminals, some of which are operated in
partnership with western firms, would be natural targets. A simultaneous
closure of the Strait of Hormuz and disruption of Red Sea traffic would
block the export of roughly five million barrels per day. While former UN
weapons inspector Scott Ritter predicted oil prices could surge to $120 per
barrel, Iran might be capable of pushing them as high as $200.

China, when retaliating against Trump’s tariffs, acted strategically. It
imports just 7 percent of its pork from the US, but most pork producers are
in Republican “red states.” Targeting that sector hurt Trump’s base
directly.

While spiking oil prices and global economic turmoil would harm Iran’s
allies and the Global South, Iran’s adversaries in the US, UK, Israel, and
EU stand to lose the most. If Iran wages a smart economic war, even
Evangelicals may start caring more about their grocery bills than hastening
the reconstruction of the “Third Temple” and other end-times prophecies.
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