Expert economists tell AlterNet top Trump adviser's claim is 'nuts'

One of President Donald Trump’s top economic advisers argued in a Thursday editorial for The Wall Street Journal that the Iran war will lower energy prices.

Expert economists who spoke to AlterNet strongly disagree.

Peter Navarro, the White House senior counselor for trade and manufacturing and one of the chief architects of Trump’s tariff policy, argued in the Journal that Iran “has imposed a hidden tax” on the economy by limiting their growth and raising prices, a so-called “Iran Terror Premium.” If Iran’s religiously extreme regime is overturned, Navarro argued, this premium will vanish and oil prices will therefore drop.

“The burden of the Iran Terror Premium rarely appears as a dramatic economic shock,” Navarro asserted. “Instead, it behaves more like a parasite on the global economy—quietly draining growth through slightly higher fuel prices, transportation costs and production expenses year after year.”

Stating that “the economic logic is clear,” Navarro concluded that “if the geopolitical risk associated with Iran were reduced, oil prices would fall toward their underlying supply-and-demand equilibrium. Market evidence suggests equilibrium prices could be well below $60 a barrel.”

Ed Gresser, Vice President and Director for Trade and Global Markets at the Progressive Policy Institute, told AlterNet he believes Navarro is “not correct.”

“The price of oil has gone up, not down, since this started, from about $65/barrel to $95/barrel,” Gresser explained. “The long-term hypothesis he puts out is that at the end of this, there will be a calm and stable environment in the Persian Gulf which reduces uncertainty risks and reduces prices. Obviously there are lots of possible outcomes, with this sort of 'best-case scenario' among them, but the best-case scenario hasn't typically been the result of previous wars in the Middle East.”

Gresser also drew attention to Navarro’s advocacy of high tariffs, which the Cato Institute identified as well outside the mainstream of economic thought. Since the end of the Great Depression, a global policy of free trade has been inextricably linked to sustained prosperity; Trump is the first protectionist president since another Republican, Herbert Hoover, was widely blamed (correctly or otherwise) for America’s 1930s economic crisis.

“As to the economic impact of tariffs on ordinary people so far, trackers at the Harvard Business School are estimating a 7% increase in prices of imported consumer goods subject to tariffs, and a 4% increase in prices of similar domestically produced goods,” Gresser told AlterNet. “A lot of the impact appears to have fallen on businesses, though - in both consumer and industrial sectors they seem to have been trying pretty hard to limit price increases. So instead they have tried to save money by reducing hiring, and new job creation has dropped very sharply since 2024.”

Dr. Richard Wolff, an economist emeritus at the University of Massachusetts Amherst, was even harsher than Gresser; he told AlterNet that Navarro’s editorial is nothing short of “bought and paid for economic analysis.”

“Mr. Navarro's analysis depends entirely on linking rising oil prices to geopolitical and military risks,” Wolff pointed out before listing a number of questions that Navarro failed to answer. (The White House has not commented on the content of this article at the time of publishing.)

“How does he know and measure that?” Wolff asked. “Why must he ask the oil company CEOs why they raise oil prices? Will they answer ‘to get more profits’?”

Wolff speculated that instead the companies “will point to risks they must take account of” even though “believing such answers is naive at best and corrupt at worst. Claiming risk is a corporate ploy — as is making analyses based on such claims.” Even though Trump economic advisers like Navarro advocate capitalist competition, Wolff pointed out that “no word in this article deals with competition among oil companies and what role it plays in price movements.”

He concluded, “The point of this article is to justify US military aggression against Iran by scapegoating Iran controls over oil. Iran is only one of several significant oil exporters shaping the global price. The US has a bigger share of total exports than Iran. Blaming Iran for the whole oil market is nuts.”

In addition to seemingly misjudging the economic impact of Trump’s Iran war, Navarro has also been accused of failing to deliver on the main promise of his tariffs — creating jobs.

“Far from the manufacturing sector ‘roaring back’ as Trump promised, the United States has lost more than 100,000 manufacturing jobs over the past year,” Allison McManus and Dawn Le of the Center for American Progress wrote in February. “These actions have pushed the country’s closest trading partners to seek deals elsewhere, including with China: Canada, India, Japan, South Korea, and the European Union have all recently sought new agreements without the United States.”

The Wall Street Journal Editorial Board has also claimed Trump’s tariffs are hurting the economy, writing earlier in March that “there’s no denying the February report was lousy. The U.S. shed 92,000 jobs and revised down gains for January and December by a combined 69,000. The question is what to make of the declines.” They added that “if Mr. Trump wants a tax-cut boost for the economy while the war continues, he could call off his new 15% universal tariff. Consider it our contribution to easing everyone’s economic anxiety.”

In addition to being one of Trump’s most influential and controversial economic policymakers, Navarro is also a convicted criminal. According to a 2024 press release by the Justice Department, Navarro “was sentenced today to four months in prison for refusing to appear before the U.S. Congress to give testimony and produce documents as required by a subpoena he received from the United States House Select Committee to Investigate the January 6th Attack on the U.S. Capitol.”