With April’s inflation report coming in below forecasts, the Trump economy appears to be defying analysts’ and politicians’ predictions of collapse in the wake of his “Liberation Day” tariffs and subsequent trade negotiations. As Trump adds more notches to his belt in deals with key trade partners, the stock market has rebounded to pre-tariff levels, even while many tariffs remain largely in place on major economies such as China and the UK.
In April of this year, former Treasury Secretary Janet Yellen said the developments of Trump’s tariffs point to “a loss of confidence in U.S. economic policy” and called the tariffs “the worst self-inflicted policy wound I’ve ever seen in my career inflicted on our economy […] they are “doing immense damage.”
Trump, on April 2, announced his “Liberation Day” tariffs on nearly every nation, imposing a “reciprocal” rate calibrated to address the American trade deficit with each nation. The tariffs far exceeded what analysts had expected, and the stock market was sent reeling for days. Trump himself reshared a video suggesting that he deliberately crashed the market to force an interest rate cut to allow the government to refinance its debt at a lower rate.
Bond markets bucked at the move and Trump ultimately announced a 90-day pause on most tariffs to pursue trade agreements, though he left in place a 10% baseline and kept China’s above 100%.
Markets gradually recovered, and major indices have since exceeded their April 1 closes. Boosting some of that movement have been trade deals with the United Kingdom and China, two of the biggest American trading partners. Both deals resulted in lower import tariffs on American goods and higher import tariffs on goods from those nations, marking net gains for the U.S. in Trump’s bid to rebalance trade.
Read together, multiple indicators suggest that the Trump economy defied expectations and that the trade policies did not adversely damage the nation’s overall economic health. If the trend continues, Trump will have fulfilled what politicians call “dinner table” issues for millions of Americans.
