Trump’s Economic Boasts Collide with Gas Prices and Iran War Fallout

On Monday, President Trump hosted over 100 small-business leaders in the East Wing of the White House to celebrate what he called “record business” following his return to the White House. He attributed the economic success to the One Big Beautiful Bill Act, the legislative centerpiece of his second term, which includes sweeping tax and regulatory cuts. Trump described the economy as “roaring” and performing “phenomenally, unbelievably, historically well.”

However, his own allies quickly pushed back. Within hours, Politico reported that some of the president’s advisers were dismissive of his economic messaging, arguing it would not resonate with voters ahead of the midterms. “Everybody is pretty realistic about the fact that holding the House is going to be extremely difficult,” said one anonymous source. “Every day the war goes on, every day gas prices hover around five bucks, it makes it less and less likely, and it’s already very unlikely.”

The reality on the ground contradicts Trump’s upbeat assessment. Thanks to his administration’s policies and the ongoing conflict in Iran, the national average price of gasoline is nearly $4.50 per gallon, up from about $3.15 a year ago. In some Upper Midwest and West Coast states, prices are hovering around $5 per gallon. This surge follows earlier price spikes triggered by Trump’s tariffs, some of which were later invalidated by the Supreme Court. Undeterred, Trump has continued to impose new tariffs, including a 25 percent tax on cars and trucks imported from the European Union, announced last week.

Trump’s foreign policy moves have further destabilized energy markets. On Sunday, he unveiled “Project Freedom”, an initiative aimed at reopening the Strait of Hormuz—a critical shipping lane through which about 25 percent of the world’s oil and gas supply passes. Iran had effectively closed the strait in late February after the U.S. began bombing the country. Trump’s “war” secretary, Pete Hegseth, claimed on Tuesday that a “red, white, and blue” protective dome had been established over the strait, though there was no evidence of increased maritime traffic. On Monday, two Navy destroyers passed through the strait, and by Tuesday, only a few stranded ships had managed to do the same. Facing limited progress, Trump announced that evening that he was pausing Project Freedom.

The economic fallout is immediate and severe. As of Tuesday, a barrel of crude oil was trading above $100, compared to $60 a year ago. Even if the Strait of Hormuz partially reopens and oil prices decline, the impact on gas prices at the pump may take months to materialize. As The New York Times reported in early April, “There’s a saying in the energy industry that explains how the cost of gasoline behaves: It goes up like a rocket, but down like a feather.”

The Strait of Hormuz is not the only source of supply disruption. The broader conflict in Iran has exacerbated existing supply chain issues, compounding the economic strain. With midterm elections looming and voters feeling the pinch at the pump, Trump’s economic optimism faces a harsh reality check.