Six months into his second term, Donald Trump has made fast progress in implementing his disruptive economic agenda. The US president has started to build a tariff wall around domestic manufacturers; customs revenue has already surpassed $100bn this year, and his aggressive negotiating strategy has yielded concessions from major trading partners, most recently Japan. Earlier this month, the commander-in-chief got his tax-cutting “big, beautiful bill” through Congress. The administration’s tough stance on illegal labourers also appears to be having its intended effect: reported attempts by individuals to cross the US southern border without authorisation have been slashed.
Ill-advised as much of the president’s deficit-raising “America First” programme may be, there is little significant economic damage to point to, so far. Growth, inflation and the jobs market are confounding the most dire forecasts. The S&P 500 is trading at a record high. However, the US economy is, showing resilience in spite of Trump’s agenda, not because of it, and the impact is only beginning to be felt.
Take the president’s protectionist plans. Inflation data for June showed a small tariff-related bump. But price growth remains tame considering that the US effective tariff rate is now around seven times higher than last year. There are mitigating reasons for this. Businesses are running down inventories that they built up ahead of the tariffs. As these are depleted, higher costs will increasingly be passed on to consumers. Trump’s broader suite of tariffs — including sectoral levies — are also yet to be implemented.