The US economy seems immune to Donald Trump’s turbulence. The first year of his second term in the White House was full of shock due to his willingness to impose a frenetic agenda with a marked protectionist emphasis. Businesses are already inoculated against the giddiness and uncertainty surrounding the GOP. Since he won the election against Democrat Kamala Harris just a year ago, the world trade order has changed dramatically; disrupted global supply chains, passed a law, gave it a name Big and beautifulwith large tax cuts for businesses; He reduced public spending with the help of Elon Musk, fired thousands of officials, opted for cryptocurrencies; pressured multinationals to invest in their country; tightened immigration control to unexpected limits; and launched a campaign of aggression against the chairman of the Federal Reserve, to try to further lower interest rates, among many other things.
Despite all this apparent revolution, the national economy continues its course a year after the electoral victory. The occupant of the White House has shocked the global economy, but to the surprise of many, the activity of the world’s leading power continues to show good health: the stock market is at an all-time high, companies are increasing profits, the trade deficit has narrowed, the budget imbalance is the lowest in the last three years, GDP is growing at an annualized rate of 3%, even if economists expect a slight slowdown, inflation is at 3%, far from the highs of two years ago, the unemployment rate is at 4.3%; and although job creation has worsened in recent months, analysts attribute this to a decline in supply, because there are fewer immigrants to work.
There are clear risks, such as that of a stock market bubble fueled by AI fever; or the appreciable growth in inequality, but the great macroeconomic data support the strength of the US economy.
A Reuters report on Trump 2.0’s first year in office notes: “Investors are learning to manage unpredictability, including clear strategies to exploit Trump’s tendency to escalate threats and then backtrack. The so-called TACO strategy Trump always goes away) has become common practice.”
There are numerous examples in this sense, but perhaps the most paradigmatic is the relationship with China. After imposing a 145% tariff in April, the Republican rushed to negotiate a deal to avoid irreparable damage to both economies when the Asian giant responded with 125% trade countermeasures. Later this fall, he tried again to blame Beijing by limiting access to microprocessors, but in response Xi Jinping threatened to cut supplies of rare earths. An angry Trump threatened to sever ties and impose an additional 100% tariff. But his anger didn’t last long. Two weeks later both leaders met to calm the trade escalation.
“You have to ignore Trump’s rhetoric and see the picture as it is,” says a financial analyst, who knows the details of the American economy intimately. “The truth is, the U.S. economy is doing well and it doesn’t look like that will change anytime soon.”
To take stock of the extent to which Trump fulfilled his promises during the last election campaign and its consequences for the American economy, it would be necessary to examine what happened with tariffs, inflation and the labor market. These are the three big basic ideas with which he defeated Democrat Kamala Harris. And although the president’s staging has at times been worthy of vaudeville – recall the image of Trump in the White House gardens showing the world a rudimentary sheet of cardboard with the tariffs he would impose on the world – the truth is that he has caused no more havoc on the world economy than a spring cold for which he is already vaccinated.
Duties, the new trade rules
On April 2nd the Liberation Dayas Trump christened the day he presented himself to the world to announce indiscriminate tariffs on the entire world. The measure triggered anxiety on the markets for a few days. The MSCI World stock index recorded losses of 10% in a few days, US bonds skyrocketed. The tycoon who had made his fortune through real estate speculation on the streets of New York had in one fell swoop changed the rules of international trade and thrown decades of diplomacy to the wind. The stock market scare only lasted a week and a half.
The main international analysts were quick to worsen their forecasts. Some have risked catastrophe, warning of a decline in global trade and a return to inflation. But eight months later, the world is still turning. “The tariffs did not produce as big a shock as initially announced,” acknowledged Kristalina Georgieva, managing director of the IMF, a couple of weeks ago. The Fund finds that of the 191 countries analyzed, 188 avoided retaliatory tariff measures, thus avoiding a trade war and stabilizing markets. “Despite the turbulence, an estimated 72% of world trade continues to respect the most-favoured-nation principle: countries apply the lowest bilateral tariff to all their trading partners,” Georgieva explained.
The US trade-weighted tariff rate has fallen from 23% on Liberation Day to 17% today, a level that is still much higher than before (about 4%), but more moderate than when it was first announced.
One reason for the resilience of the U.S. economy has been the ability of businesses to adapt. They frontloaded imports to get ahead of the first tariff hit, stockpiling inventories and shoring up supply chains. Additionally, years of strong post-pandemic profits have allowed many to reduce margins, blunting the impact of tariffs on prices.
The soft landing of inflation
A poll released this week by CNN reveals Americans’ growing concern about shopping cart prices. 47% of respondents believe that the cost of living and the economy are the number one problem facing the United States. “They are particularly sensitive because the economy continues to generate uncertainty,” finds another survey published by the CBS network whose conclusions are similar.
“Consumers perceive prices as higher. The reason why they are so dissatisfied is because of the inflation that we had between 2021 and 2023. You can say that prices are not rising as much now, but that doesn’t mean that people aren’t feeling those higher prices because of the inflation that we had two or three years ago. It’s good that prices are not rising as fast as before, but they are still much higher than before. It will take some time for that effect Since “If real income rises, you will feel better over time,” explained Federal Reserve Chairman Jerome Powell last week, allaying fears of a rebound in inflation due to tariffs. The truth is that workers’ income is rising and offsetting the rise in prices in recent quarters. And although inflation rose to 3% in September, the Federal Reserve expects it to be temporary.
Meanwhile, Powell is being harassed and taunted by Donald Trump to resign because the Republican wants to lower rates more aggressively to further stimulate the economy with a year left until the midterm elections, which could clip Trump’s wings of power in Congress. But the president of the US central bank is trying to balance the risks between inflation and the deterioration of the labor market.
Artificial intelligence and work
Another key to the resistance of the American economy to Trump’s swings is the euphoria that Wall Street is experiencing. Stock indices are at historic highs thanks largely to the explosion of artificial intelligence (AI). Large technology companies such as Amazon, Nvidia, Microsoft, Google or Meta are experiencing an investment fever to stay at the forefront of this technology. They invest hundreds of billions in advanced microprocessors, data centers and power plants to provide such infrastructure. Investors don’t want to miss out on the stock market euphoria. “The United States is the country in the world with the greatest participation in the stock market. 60% of families invest,” a leading Spanish banker said two weeks ago in Washington. And, of course, if the stock market does well, these investors earn capital gains and increase their consumption. “The rise of artificial intelligence is significantly boosting consumption thanks to the wealth generated in the tech sector over the past 12 months,” says Bernard Yaros, an economist at Oxford Economics.
Those who have shares celebrate, but those who have not put together savings to invest in the stock market fare worse. Inequality is rampant. And the dismissals of public employees and workers replaced by automation only worsen the situation.
Job creation is slowing significantly. Trump arrived at the White House with the promise of accelerating job creation, but at least in this he is not keeping his commitments. The latest official data published reveals that 22,000 jobs were created in August, well below expectations. Analysis from the Bureau of Labor Statistics indicates that 13,000 jobs were destroyed in June, the first decline in employment in more than four years. The unemployment rate, however, remains stable at 4.3%, the highest since October 2021, but a historically low level. The job market is also starting to feel the effects of the change in model imposed by the advent of artificial intelligence.
“Despite the strong economic growth we saw in the second quarter, this month’s release further confirms what we’ve seen in the labor market: that American employers have been cautious in hiring,” according to Nela Richardson, chief economist at ADP, a private body specializing in payroll issues, who estimates that another 32,000 jobs were lost in September.
However, the economic authorities are not worried. They attribute this circumstance to Donald Trump’s tightening of immigration policies. He launched the Immigration and Customs Enforcement Service (ICE) to carry out raids to arrest illegal migrants. Thousands of undocumented informal workers are leaving the job market. The supply of labor is reduced, but the demand is also limited to adjust the costs due to tariffs. The combination of both forces leaves the unemployment rate constant.
Finally, the American economy is feeling the effects of the government shutdown in the last quarter of the year. Republicans and Democrats can’t agree to extend budgets through December, which has caused dozens of federal agencies to close or go offline, including economic analysis bureaus, museums, national parks and even air traffic controllers, which has thrown the country into a statistical blackout. Trump takes advantage of this to fire thousands of workers.
The Congressional Budget Office (CBO) has released a report estimating that the US economy will lose between $7 billion and $14 billion due to the federal government shutdown. It projects that the failure to pay federal workers and the interruption of food benefits for low-income citizens will temporarily reduce GDP by between one and two percentage points in the fourth quarter of 2025, although it believes that much of this loss would be recouped as soon as the government reopens.
