The Economic Toll of Trump’s Policies Will Soon Be Visible
Mainstream economists have underestimated the cost of all the confusion the administration has unleashed, particularly on trade and immigration.
Many forecasters and investors misinterpret what is happening in the American economy. Some believe the uncertainty around President Donald Trump’s trade and other economic policies is abating, while a loud and influential minority argue that the administration’s deportations and tariffs are not causing the predicted harm. Inflation increased only modestly before coming down in 2025, they point out, while the latest data show the economy growing at its fastest rate in two years.
These mistaken assessments are based on a fundamental misunderstanding of how government-induced uncertainty affects the economy. This confusion makes sense because no presidential administration has imposed this kind of uncertainty on the US private sector in a century or more. The economy’s solid growth due to artificial intelligence investment further muddies recognition of these unfamiliar harms. Careful analysis, however, shows the stagflationary effects of Trump’s policies are kicking in and should become too evident to miss as we approach April 2, the first anniversary of his so-called Liberation Day.