One Year of Trump 2.0: Slower Growth, Tariffs, and Tech Rivalry Define Economy

One year after returning to the White House, President Donald Trump’s economic agenda—centered on aggressive tariffs, deregulation, and technological competition—has reshaped the U.S. economy, resulting in slower growth, a cooler labor market, and increased volatility in global trade and financial markets. Describing tariffs as the “most beautiful word” to him, Trump has imposed levies on numerous trading partners, reversing decades of U.S. advocacy for free trade and triggering supply chain shifts and retaliatory measures.

Moderated Growth Amid Trade Uncertainty

Economic growth slowed in Trump’s first year back, with real GDP expanding an estimated 1.8%–2% in 2025 after a 2.8% rise in 2024. The first quarter of 2025 saw a 0.6% contraction—the first quarterly decline since 2022—largely due to a surge in imports as companies stockpiled ahead of new tariffs. Growth resumed in subsequent quarters, supported by consumer spending and AI-related investment, but economists note that trade uncertainty and fading post-pandemic momentum have tempered expansion.

Cooling Labor Market and Persistent Inflation

Job creation slowed markedly, with only 584,000 positions added in 2025—the weakest annual gain since 2003. The unemployment rate edged up to 4.4% by year-end. While wage growth remained around 3.5%–4% nominally, real gains were limited by persistent inflation in housing, food, and services. Headline inflation eased to 2.7%, but core inflation stayed above 3% for much of the year, prompting the Federal Reserve to cut rates three times despite public criticism from Trump, who repeatedly attacked Chair Jerome Powell.

Trade Deficits Narrow as Tariffs Reshape Flows

The U.S. trade deficit narrowed significantly, dropping 39% month-on-month in October to $29.4 billion—the lowest since June 2009. The administration credits tariffs for the shift, though economists attribute it largely to softer domestic demand and higher import costs. Tariff revenue reached $264.05 billion in 2025, though the Supreme Court is reviewing the legality of the measures, which could force refunds if overturned.

Tech Investment Surges Amid China Rivalry

Technology stood out as a bright spot, with massive investments in semiconductors and AI. TSMC, Micron, Nvidia, and Apple announced combined commitments exceeding $1.4 trillion, while the U.S. took a 10% stake in Intel. A new semiconductor pact with Taiwan guarantees at least $250 billion in direct investment. These moves are part of a broader industrial policy aimed at securing technological leadership, though tightened export controls on China have raised costs and risks of retaliation.

Market Volatility and Policy Uncertainty

Financial markets reflected a mix of optimism and caution. Stock indexes hit record highs after tariff fears eased, with the Dow, S&P 500, and Nasdaq gaining 15%, 18%, and 22%, respectively. However, bond markets remained sensitive to fiscal deficits and trade-related inflation, and the dollar experienced volatility as policy shifts influenced global capital flows.