Donald Trump warned last year that a Joe Biden victory would spark a “Kamala economic crash” and a depression. Voters blamed post-pandemic inflation on the Biden administration and sought change. Americans broadly believed the economy was already in a downturn in May 2024. Trump’s rally rhetoric played into that fear and helped secure his win over an aging opponent.
Since his return to office, the U.S. has not enjoyed a “Day One boom.” The Dow Jones Industrial Average sits higher than a year ago, yet many basic measures show weakness. Consumer sentiment has fallen and polls report most Americans disapprove of Trump’s economic steps. Media coverage of economic discontent lags compared to last spring.
Trump’s “Liberation Day” tariffs target imports from key partners. They aim to bring back 19th-century protectionism and boost factories. In July, tariffs yielded $29 billion in revenue, up from the prior year. On an annual basis, that may reach $350 billion, far short of income tax receipts near $3 trillion.
The tariffs have cost thousands of jobs and driven up prices at home. Appliance maker John Deere cited tariff costs when announcing hundreds of job cuts last week. The Tax Foundation finds these duties raise the average household’s tax bill by $1,304 in 2025 and $1,588 in 2026. The group also forecasts a near 1 percent drop in GDP over the next decade.
Trump’s growing feud with Fed Chair Jerome Powell adds to recession fears. He insists on lower interest rates and seeks to replace Fed governor Lisa Cook over alleged mortgage fraud. His push for Fed loyalty risks undermining the central bank’s independence.
Trump signed a major corporate tax cut this summer and expects rate cuts to fuel growth. Yet pressuring the Fed could backfire. A weakened Fed may spark a stock market crash and a dollar collapse. Lower rates could also boost inflation that is already edging higher.
Beyond tariffs and the Fed fight, Trump eyes revenue grabs from top firms like Intel, Nvidia, and Nippon U.S. Steel. His broader aim appears to be direct control over the U.S. economy. Economists warn such power grabs risk deepening a downturn rather than helping families.
When Trump took office, the U.S. economy led its peers with steady growth, job gains, and manageable inflation. The Biden team had guided post-pandemic price spikes lower through industrial policy and infrastructure spending. In months, Trump has undone much of that progress.
No president would have signed the July tax cut without support from both parties. Yet none before Trump tried a sweeping trade war and a direct assault on Fed independence. Voters upset by high prices may have traded one risk for many others.
If a recession hits in the next three years, all signs point to Trump bearing the blame. His tariff wars, the Fed power struggle, and aggressive economic moves have combined to push the nation closer to a downturn than at any point in recent memory.
