US and Iran Sign Historic Deal to End 110-Day War as Domestic Fights Over $80 Billion Cost Begin

The United States and Iran have officially signed a memorandum of understanding to end their 110-day war, halting a conflict that devastated the global economy and claimed thousands of lives. Brokered by Pakistan, the agreement was signed remotely by US President Donald Trump and Iranian President Masoud Pezeshkian, initiating an immediate ceasefire across all fronts. The breakthrough pulls the Middle East back from the brink of a wider regional conflagration, though it leaves deep geopolitical fractures and a massive financial bill in its wake.[1][5]

The immediate geopolitical impacts of the 14-point framework are sweeping. The United States has lifted its naval blockade on Iranian ports, while Tehran has agreed to instantly reopen the Strait of Hormuz—a critical maritime chokepoint through which roughly a fifth of the world's oil supply passes. The pact also explicitly mandates a halt to fighting in Lebanon, effectively requiring Iran to rein in Hezbollah forces that have been locked in intense combat with the Israeli military since the war began on February 28.[1][4][5]

Under the terms of the preliminary agreement, Iran will receive massive economic relief. The US has committed to waiving sanctions on Iranian crude oil exports and facilitating a $300 billion international reconstruction fund to help rebuild the country's shattered infrastructure. In exchange, Tehran pledged to dilute its stockpile of highly enriched uranium and enter a 60-day negotiating window to finalize a comprehensive nuclear settlement.[1][5]

But as the guns fall silent in the Persian Gulf, a fierce political battle is erupting in Washington over the financial toll of the conflict. The Pentagon has quietly informed lawmakers that it needs an $80 billion supplemental funding package to cover the costs of the Iran war and replenish severely depleted munitions stockpiles. This figure dwarfs the Defense Department's previous public estimate of $25 billion, sparking immediate outrage on Capitol Hill.[3][6]

The sticker shock is threatening to derail the Trump administration's broader defense agenda just months ahead of the midterm elections. Defense Secretary Pete Hegseth faced intense bipartisan scrutiny this week while attempting to defend the administration's historic $1.5 trillion military budget request for 2027. Lawmakers accused the Pentagon of obscuring the true cost of a war that was initiated without congressional approval, demanding full transparency before authorizing new funds.[2][3]

"You can win a whole lot of little small battles and lose the war, which is why you don't stumble into the war in the first place," Representative Adam Smith, the top Democrat on the House Armed Services Committee, argued during the contentious hearings. The administration's budget director had previously testified that the White House had no official estimate for the war's total cost, a position that is now untenable as the $80 billion bill comes due.[3][6]

Internationally, the peace agreement has severely strained the historically ironclad US-Israel alliance. Israeli Prime Minister Benjamin Netanyahu and his cabinet view the deal as a dangerous capitulation that leaves Israel highly vulnerable. Israeli officials note that the memorandum fails to dismantle Iran's vast ballistic missile program or permanently cut off funding to proxy militias, effectively rewarding Tehran for its aggression.[1][7]

In response to the mounting criticism from Jerusalem, President Trump has publicly lashed out at Netanyahu, calling his judgment into question and claiming credit for Israel's continued existence. The unprecedented public rift between the two leaders underscores the shifting dynamics of the Middle East, as the US prioritizes economic stability and military disengagement over Israel's immediate security demands.[7][8]

In Tehran, the mood is triumphant but cautious. Supreme Leader Ayatollah Mojtaba Khamenei—who assumed power after his father, Ali Khamenei, was killed in a US-Israeli airstrike on the first day of the war—issued a written statement approving the deal. Khamenei noted he had a "different view" on the negotiations but permitted the agreement to proceed in order to lift the crushing economic pressure on the Iranian people.[5]

The ultimate success of the peace framework now hinges entirely on the fragile 60-day negotiating window. US officials have warned that either side can walk away at any time, and President Trump has threatened to resume bombing if a final, binding nuclear pact is not reached. For now, global markets are breathing a sigh of relief as oil tankers resume their transit through the Persian Gulf, but the underlying conflicts that sparked the war remain unresolved.[1][5]