Aung Min Tun drives a delivery van up to 500 miles a day, so he was thrilled when gasoline prices started to drop after President Trump took office last year. Overnight this week, he watched them rise to $3.39 a gallon from about $3.00 at gas stations he visited in Illinois.
“This 30 cents within the night, I’m just a little concerned,” Tun said while taking a break at a rest stop. His one-man business should be fine if prices stay below $3.50 a gallon. Any higher and it will hurt, Tun said. Above $4.50, “I could not run the business,” he added.
Trump’s pledges to lower prices and to keep the U.S. out of foreign wars helped usher him to a second term. Yet in advance of the 2026 midterm elections, foreign interventions have dominated the White House’s recent focus—and cast fresh uncertainty on a fragile economy that was starting to show a few signs of improvement. Conflict with Iran is creating domestic challenges that lawmakers and Republican strategists didn’t anticipate coming into the midterm elections.
“The longer this goes on, the worse it is politically, full stop,” said Republican strategist Matthew Bartlett, a first-term Trump appointee to the State Department. Trump is zeroed in on international affairs at the expense of domestic political strategy, including on the economy, he said. “‘America first’ has now turned into America strikes first.”
The U.S. economy and labor market cooled last year after big jolts, including Trump’s tariffs and a government shutdown.
But recent months have brought hopeful signs. Low gasoline prices had helped cool the annual inflation rate to 2.4% in January from 2.7% in December. Hiring rebounded in January. Last week, the 30-year fixed-rate mortgage dropped below 6% for the first time in 3½ years, giving a potential boost to the long-suffering housing market just before the important spring selling season.
Less than a week into the conflict, cracks are emerging. U.S. gasoline prices are up and markets are down. The attacks on Iran have halted a weekslong rally in U.S. government bonds, pushing up the yield on the 10-year Treasury note, which plays a big role in determining mortgage rates and other borrowing costs nationwide. Mortgage rates ticked back up on Thursday to 6.0%.
A sustained war throughout the Middle East could deepen the impact, potentially causing inflation to head back up—or stoking anxieties that could damp consumer spending and slow economic growth.
“President Trump can walk and chew gum at the same time,” said White House spokesman Kush Desai. “While the U.S. military continues wrecking the Iranian terrorist regime, the Trump administration at home remains laser-focused on delivering more economic relief for the American people.”
Trump on Thursday afternoon said his administration would soon announce new initiatives to keep down oil prices. “We had it very low, but I had to take this little detour,” he said. Still, the U.S. is using the military “more than I’d like to use it, to be honest,” he also said.
A Reuters/Ipsos poll found that shortly after the strikes, about a quarter of U.S. adults supported the military campaign against Iran. That poll found 45% of American adults said their support would weaken if the U.S. saw higher gas or oil prices. Oil and gasoline prices jumped after the attack and continued climbing after tankers stopped flowing through the Strait of Hormuz. Treasury Secretary Scott Bessent said Wednesday that crude markets are well supplied and the U.S. Navy would provide safe passage for oil tankers, if needed.
Tun, the delivery-van driver, immigrated to the U.S. from Myanmar in 2017. He voted for Trump in 2024 and supports the president’s decision to attack Iran and its leadership. “I stand with the U.S. president…because we came from a country with dictatorship and we know how dictatorships are,” he said.
But he needs the economy to hang in there so he can pay off his debts, he said. Tun drives up to nine hours a day from state to state, often sleeping in a fold-up bed in the back of his van. Several years ago his wife suffered a brain injury that left her unable to work and saddled the family with medical debt. Tun also has some credit-card debt. “I am a little bit behind. So hopefully if the economy is fine, I will pay off all the debt next year,” he said.
Voters have a “general skepticism” about involvement in the Middle East, Sen. Kevin Cramer (R., N.D.) told reporters Tuesday. “I also appreciate the fact that Donald Trump, the populist that he is, isn’t making national security decisions based on polls.”
Democrats have been campaigning for months on bringing down costs ahead of this year’s midterm elections. “Americans need focus on the high costs of food, not another war in the Middle East,” Senate Minority Leader Chuck Schumer (D., N.Y.) said Wednesday.
Kareem Miller, owner of a small trucking company in Chicago, said his drivers are reporting big increases in diesel fuel costs throughout the Midwest, including Ohio and Illinois. AAA’s fuel price tracker shows diesel is selling for about $4.20 to $4.30 a gallon in Illinois and Ohio, up 10% to 13% from a week ago.
“Prices fluctuate somewhat but never to this level so quickly. It just skyrocketed,” Miller said. His drivers are independent contractors who cover their own fuel costs, so they are taking a hit in their own pockets, said Miller, who voted for Kamala Harris in 2024.
Brian Grzebin, president of mortgage banking at Univest Bank and Trust in Pennsylvania, said business has been up this year thanks to lower rates, with more mortgage applications coming in and more houses on the market.
But his bank’s rates spiked to around 6.25% to 6.375% after the conflict began this week, before falling back to around 6%, he said. How much the war affects the housing market “depends how long it lasts,” he said.
The military campaign has disrupted airfreight, said Ryan Petersen, chief executive of global logistics company Flexport, partly because the United Arab Emirates and Qatar are hubs for cargo between Asia and Europe. Asia to U.S. airfreight prices jumped 60% on Tuesday, Petersen said. Flexport warned that businesses should prepare for higher rates and tight capacity in ocean and air networks.
Mary Egan, a 61-year-old nurse in Indiana who is hoping to retire at 67, noticed the value of her 401(k) had fallen by about $3,000 at one point this week.
“If it dropped like $50,000, I’d be like ‘God, I need to get another job.’ I hope we don’t get there but you never know,” Egan said. “I just want to be able to live somewhat comfortably in my retirement.”
Egan is unhappy to see gas prices rising after she just bought a bigger car—an SUV with worse fuel efficiency than her old Honda Civic—so she can help drive her grandchildren around.
She said she has heard bad reports about Iran’s leadership for years but isn’t certain about the need for war. “I don’t know, to be honest. I don’t know if this war was necessary.”
Write to Jeanne Whalen at Jeanne.Whalen@wsj.com, Lindsay Ellis at lindsay.ellis@wsj.com and Lindsay Wise at lindsay.wise@wsj.com
