Global Economy Hit by Iran War and Hegseth’s Department of War

The global economy is facing significant disruption as a result of the ongoing war with Iran, characterized by rising energy and fertilizer costs and the systematic incapacitation of Iranian industrial capacity.

On April 2, 2026, reports confirmed that Iran’s two largest steel plants, the Khuzestan Steel Company and the Mobarakeh Steel Company, have shut down following multiple rounds of U.S.-Israeli air strikes. The strikes, which were first launched on March 27, 2026, have caused major damage to the country’s industrial infrastructure.

Mehran Pakbin, deputy head of operations at the Khuzestan Steel Company in south-western Iran, stated that restarting these units will take at least six months and up to one year. The Mobarakeh Steel Company, located in the center of the country, reported that its production lines have completely shut down following the high volume of attacks.

Iran is the 10th largest producer of steel globally according to data from the World Steel Association. Because the country uses steel for domestic construction and manufacturing and exports the material internationally, the halt in production is expected to impact global supply chains and businesses.

Global Economic and Energy Impacts

The conflict has already generated collateral damage for the world economy. On March 10, 2026, reports indicated that the war was driving up the prices of energy and fertilizer.

International efforts have focused on the maritime trade routes in the region. Dozens of countries have been discussing methods to reopen the Strait of Hormuz, a critical chokepoint for global oil shipments.

Destruction of the Defense Industrial Base

Pete Hegseth, who leads the department he renamed the Ministry of War, stated that Iran’s defense industrial base is nearing complete destruction. Hegseth told reporters that soon and very soon, all of Iran’s defense companies will be destroyed.

Beyond defense companies, other critical infrastructure has been targeted. Iran reported that a key bridge connecting the city of Karaj to Tehran was bombed and a 100-year-old medical research center in the capital sustained damage.

Iranian Foreign Minister Abbas Araghchi stated on March 27, 2026, that Israeli forces, acting in coordination with the U.S., hit two of the largest steel factories, a power plant, and civilian nuclear sites.

U.S. Military Leadership Changes

On April 2, 2026, Secretary of War Pete Hegseth asked Army Chief of Staff Randy George to step down and retire. Pentagon spokesperson Sean Parnell confirmed that Gen. George’s retirement was effective immediately.

The leadership change occurred as the conflict entered its fifth week. In his first address to the nation since launching strikes on February 28, 2026, President Trump stated on April 2, 2026, that the conflict was nearing completion, but indicated that the U.S. Would first intensify its assault.

We are going to hit them extremely hard over the next two to three weeks. We’re going to bring them back to the Stone Ages, where they belong.

President Trump, April 2, 2026

As of April 2, 2026, the war reached Day 34. During this period, Iran has targeted countries in the Gulf region with drones and ballistic missiles, prompting security alerts from the U.S. Embassy in Baghdad regarding attacks by Iran-backed militias.