When President Donald Trump expanded U.S. military operations against Iran in 2026, the expectation appeared to be that overwhelming military pressure would quickly force Tehran to negotiate on Washington’s terms. The idea seemed simple: degrade Iran’s military capabilities, keep the Strait of Hormuz open, weaken the regime’s leverage, and secure a favorable deal before the conflict became prolonged.
Instead, the war risks becoming exactly what every American president has tried to avoid, a costly conflict with no obvious exit strategy.
The first mistake is underestimating Iran itself.
Iran is not Iraq in 2003. It is a country of nearly 90 million people, covering more than 1.6 million square kilometers of rugged mountains, deserts, and cities. It possesses thousands of ballistic missiles and drones, hardened underground facilities, the Islamic Revolutionary Guard Corps (IRGC), and an extensive network of regional proxy groups built over decades.
Military strikes can destroy infrastructure, but they do not automatically change political calculations. If the objective extends to regime change, history offers a warning. Removing a government is one challenge; replacing it with a stable one and leaving without creating years of instability is another. Iraq and Afghanistan demonstrated how quickly military success can become a long-term political burden.
The second—and perhaps most important—challenge is the Strait of Hormuz.
Roughly 20% of the world’s oil consumption and around one-quarter of global seaborne oil trade passes through this narrow waterway every day. Even temporary disruptions can send oil prices sharply higher, affecting economies across the globe.
Iran does not need to permanently close the Strait to create problems. Mines, drones, anti-ship missiles, fast attack boats, and periodic attacks on commercial shipping can raise insurance costs, delay shipments, and inject uncertainty into energy markets. Every disruption increases pressure not only on Washington but also on its allies.
That pressure is now becoming increasingly difficult to ignore.
Major energy-importing economies such as Japan, India, Spain, Germany, Italy, France, and other European countries all depend on stable energy supplies. They may support freedom of navigation, but they also have powerful economic incentives to push for de-escalation because prolonged disruptions mean higher fuel prices, higher electricity costs, weaker economic growth, and more inflation.
The economic consequences are already becoming politically significant.
Oil prices remain elevated compared with pre-conflict levels. Higher energy prices feed directly into transportation, manufacturing, food production, and consumer goods, making inflation harder to control.
Financial markets are reflecting growing uncertainty. The U.S. 10-year Treasury yield has climbed toward the 4.7% range, while the 30-year Treasury yield has approached the 5% level. Higher yields increase borrowing costs for households, businesses, and the federal government. While yields are influenced by many factors, a prolonged conflict that keeps energy prices elevated creates another inflationary pressure at a time when markets are already concerned about government debt and fiscal deficits.
The conflict also arrives at a sensitive moment for the global technology economy.
The United States is undergoing one of the largest AI infrastructure investment cycles in history. Hundreds of billions of dollars are being committed to AI data centers, advanced semiconductors, cloud infrastructure, and energy capacity needed to power the next generation of computing.
However, that investment depends on strong capital markets and investor confidence. Recent volatility in AI-related stocks, weakness in technology-heavy indices such as the Nasdaq-100 (QQQ), and pressure across semiconductor markets reflect growing questions about valuations, the sustainability of AI spending, and whether companies can generate sufficient returns on enormous infrastructure investments.
Global markets have also shown signs of stress. Weakness in the South Korean stock market, one of the world’s most important semiconductor hubs, highlights how sensitive the global AI supply chain is to economic uncertainty, higher interest rates, and geopolitical risks.
The Iran conflict adds another layer of pressure. Higher oil prices and prolonged uncertainty make it more difficult for inflation to decline, keeping interest rates and financing costs elevated. That matters because AI infrastructure requires massive upfront capital spending. Data centers, semiconductor factories, and energy projects depend on affordable financing and long-term investor confidence.
The Middle East crisis is therefore not the only reason markets are under pressure, but it adds another significant headwind at a time when the United States is trying to lead the world’s most important technological investment race.
At home, these pressures become political.
Higher gasoline prices affect millions of American families almost immediately. Inflation erodes purchasing power. Mortgage rates remain elevated. Consumer confidence weakens. Every additional month of conflict risks making the economy a larger political issue than the military campaign itself.
Meanwhile, the broader strategic picture is becoming more complicated.
The United States is simultaneously competing with China, investing heavily in artificial intelligence, rebuilding supply chains, and managing enormous fiscal deficits. Every additional dollar and military asset committed to a prolonged Middle East conflict carries an opportunity cost. The longer the war lasts, the harder it becomes to focus on America’s other strategic priorities.
Another challenge is burden sharing.
Israel played a major role during the opening phase of the conflict. But as military operations continue, the United States increasingly appears to be carrying the larger share of the military, financial, and political burden. That shifts more responsibility—and more domestic political risk—onto Washington.
Trump’s biggest problem may be time.
His negotiating strategy has traditionally relied on applying maximum pressure until the other side agrees to his terms. But Iran has spent decades preparing for economic sanctions, military pressure, and diplomatic isolation. If Tehran believes it can simply outlast Washington politically while continuing to impose economic costs through the Strait of Hormuz, then time works in Iran’s favor rather than America’s.
The United States unquestionably possesses overwhelming conventional military superiority. But wars are not won solely through military strength—they are won when military operations achieve political objectives.
If the objective is to force Iran to reopen the Strait of Hormuz entirely on Washington’s terms while expecting Tehran to concede after sustained pressure, that objective may prove far more difficult than initially anticipated.
Trump built much of his political identity around avoiding costly, endless wars and putting American interests first. If the conflict continues without a realistic political endgame, it risks becoming defined not by military victories, but by higher inflation, elevated oil prices, rising Treasury yields, strained alliances, growing public frustration, and mounting economic costs.
At some point, the strongest strategic decision may not be escalating further—it may be recognizing that the costs of continuing are beginning to outweigh the benefits.
Power and Pelf 