President Donald Trump’s war with Iran threatens to deal a severe blow to a global economy still grappling with the impact of his historic tariff hike.
For Europe, sustained higher energy prices would take the economy to the brink of recession. For the US, they would place the Federal Reserve in an impossible position — stuck between a war that pushes inflation higher and a president demanding that interest rates come down. For China, the end of discounted Iranian oil imports adds to strain from Trump’s tariffs and a real estate collapse.
In the first days of the fighting, the intensity is high and the endgame uncertain. Bloomberg Economics has modeled scenarios for what lies ahead, and what they mean for oil prices, major economies, and the future of Iran.
It is, of course, possible that Washington and Tehran find an off-ramp, oil settles back at its pre-escalation average of $65 a barrel, and the global economy dodges a blow.
The latest signs, though, suggest there’s worse to come….
The war in Iran threatens to unleash a wave of inflation at a time when economies worldwide are already in a tight spot. Read more in the Canada Daily newsletter. https://t.co/iWX5sR3kZB
— Bloomberg (@business) March 4, 2026
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