Wall Street Issues Stark Warning That Could Impact Trump’s Legacy

Escalating oil prices could significantly diminish the anticipated economic gains for Americans from President Donald Trump’s hallmark tax reforms.

Experts from Wall Street caution that the rise in energy expenses, attributed to the conflict with Iran, might effectively negate the anticipated financial uplift due to Trump’s One Big Beautiful Bill Act.

As highlighted by financial firm Raymond James, should oil prices persist at $20 per barrel above pre-conflict levels, the increased cost of gasoline for Americans could substantially offset the advantages gained from the tax cuts.

“With the $25 increase last week, should oil prices remain stable, the fiscal benefits from the One Big Beautiful Bill Act are essentially neutralized,” noted strategist Tavis McCourt in a communication to clients.

Meanwhile, President Trump declared on Tuesday that Iran should prepare for “death, fire, and fury” if it continues to block the Strait of Hormuz, while also issuing a warning to its new leader, Mojtaba Khamenei.

The President told Fox the new Supreme Leader will be unable to ‘live in peace’ and he was ‘not happy with the appointment’, having warned Iran he would have the final say over their leader. 

US Defense Secretary Pete Hegseth also said Tuesday will be the ‘most intense day’ of attacks on the country. It followed US and Israeli strikes on oil and gas facilities over the weekend, leading to blistering fires near Tehran. 

Meanwhile, Iran’s Islamic Revolutionary Guard Corps reportedly announced that any Arab or European country that expels the ambassadors of the US and Israel will have ‘full authority and freedom’ to pass through the Strait of Hormuz. 

Rising oil prices could wipe out much of the economic boost Americans were expected to receive from President Donald Trump’s flagship tax cuts

Gas prices across the United States surged to a national average of $3.47 per gallon, with California feeling the strain as prices climbed. At a Chevron station in downtown Los Angeles, prices were among the highest seen this week 

US crude closed at $67.02 a barrel on February 27, the day before the conflict escalated. It went above $110 on Monday and was trading around $88 on Tuesday morning. 

That roughly $20 jump in oil prices could have a massive impact on household budgets.

Gasoline now averages nearly $3.54 a gallon nationwide, according to the American Automobile Association. Trump said the short-term rise in energy prices is ‘a very small price to pay’ for achieving peace. 

McCourt estimates Americans could end up spending about $150 billion more on gasoline if oil remains at these levels.

By comparison, the Tax Foundation estimates the tax cuts in Trump’s bill will deliver about $129 billion in benefits to consumers in 2025, mostly through tax refunds and lower withholdings. 

Senior Trump officials said earlier this year that millions of households could receive unusually large checks in early 2026 after unknowingly overpaying taxes throughout last year. 

As well as a boost for families, refunds were also anticipated to lift the wider US economy as Americans spend the extra cash in shops and restaurants. 

Treasury Secretary Scott Bessent said in late December that the filing season could deliver ‘gigantic’ refunds for working Americans. Kevin Hassett, head of the White House National Economic Council, used similar superlatives – though stopped short of calling it gigantic – predicting ‘the biggest refund cycle ever in the history of America’. 

However, in light of conflict in the Middle East as the US and Israel fight with Iran, the weight of these refunds will feel far less significant for Americans and their bank accounts – as well as the economy at large. 

Smoke rises from the site of an Israeli airstrike that targeted an area in Beirut’s southern suburbs on Tuesday

Search and rescue efforts continue after the Iranian retaliatory attack on Beit Shemesh near Western Jerusalem on Tuesday

Fire breaks out at the Shahran oil depot after US and Israeli attacks, leaving numerous fuel tankers and vehicles in the area unusable in Tehran, Iran on March 8, 2026 

McCourt’s report explains that rising oil and natural gas prices hit emerging markets hardest because they rely more heavily on energy imports from the Middle East. 

Higher energy costs also create a ‘stagflationary’ effect globally – pushing inflation up while slowing economic growth – leading investors to expect higher borrowing costs, wider credit spreads, and weaker stock markets if oil continues to rise.

In that environment, large US companies and defensive sectors like energy, utilities, health care, and consumer staples tend to outperform, though the trend usually reverses quickly when oil prices fall.