UBS Warns Iran Conflict Could Worsen U.S. Debt
Investment bank UBS is warning that the escalating military conflict with Iran could significantly widen the U.S. government deficit. The bank cautions that the high cost of sustained military operations, combined with ongoing trade disputes, is putting increasing pressure on the country's already high national debt.
The U.S. national debt currently stands at approximately $38.87 trillion as of March 2, 2026. This figure is equivalent to about $116,042 for every person in the country. The debt has been increasing by roughly $1 trillion every 100 days. Historically, military conflicts have been a primary driver of surges in the U.S. national debt. The wars in Iraq and Afghanistan, for instance, were financed entirely through borrowing, contributing significantly to historic debt levels. This approach marked a departure from previous conflicts like World War II and the Korean War, which were funded through a combination of debt and tax increases. The cost of U.S. wars from 2001 to 2022 alone is estimated at $8 trillion, accounting for more than half of the increase in the national debt over that period. These figures do not always include long-term costs such as veteran care and interest on the war-related debt, which will continue to accrue for decades. This new military engagement comes at a time when the U.S. is already navigating a complex web of trade disputes. Tariffs implemented since February 2025 have reached their highest levels in over a century, impacting global trade and leading to retaliatory measures from other nations. These tariffs are projected to reduce U.S. economic output and increase prices for consumers. The combined economic strain of a new military conflict and ongoing trade wars creates a dual pressure on the national budget, potentially accelerating the growth of the deficit and the overall national debt. The recent escalation with Iran began after nuclear negotiations stalled. On February 28, 2026, the United States and Israel launched a series of strikes against Iranian leadership, security forces, and nuclear and missile sites. In response, Iran has launched counter-strikes against Israel and U.S. military bases in the region.
