Summary in seconds: Six months into his second term, Donald Trump has doubled down on his hallmark “America First” agenda—expanding tariffs, rolling back regulations, and pushing corporate tax incentives to promote domestic industry. Supporters credit him with energizing U.S. manufacturing and markets, while critics warn of rising inflation, strained global trade ties, labor shortages, and widening inequality. Abroad, his policies have accelerated economic decoupling with China, tested alliances in Europe, and deepened U.S. isolation from multilateral frameworks. Domestically, immigration enforcement, limited healthcare reforms, and heavy reliance on executive orders highlight a presidency defined by disruption, nationalism, and polarized outcomes.
Six months into his second term, Donald Trump has left little doubt about the direction of his economic agenda: bold tariffs, deep deregulation, and an unapologetic “America First” approach. Supporters see a revival of U.S. industry. Critics see rising costs, shaky global growth, and mounting risks. The reality, so far, is a mix of short-term gains and long-term uncertainty.
Tariffs: A Shock to the System
Trump’s most dramatic move came with sweeping new tariffs on America’s biggest trade partners. The U.S. imposed duties of 10% to 50%, including a 34% tax on Chinese imports and 10% on British goods. Trump promised this would bring back factories and jobs, calling it the start of a new “golden age.”
But the markets were not convinced. Stocks tumbled after the announcement, and economists warned of higher consumer prices and slower global growth. Oxford Economics now expects world GDP to slip below 2% this year—the weakest since the 2008 crisis, apart from the pandemic.
Retaliation has been swift. China hit all U.S. imports with a matching 34% tariff, sending markets into another dive. The European Union braced for a 20% tariff on its exports, which could shave a quarter-point off growth. China could lose nearly three-quarters of a point. Smaller economies like Vietnam and Cambodia face tariffs nearing 50%, with potentially devastating effects.
Britain, by contrast, may escape with minimal damage, given its modest trade surplus with the U.S. But the broader picture is clear: America is isolating itself while the rest of the world doubles down on freer trade.
Domestic Economy: Growth Meets Inflation
At home, Trump has doubled down on the themes of his first term—tax breaks for corporations, regulatory rollbacks, and support for fossil fuel expansion. Manufacturing and construction have seen modest job gains, and federal contracts increasingly favor American-made goods.
Yet tariffs are proving costly. Instead of strengthening the dollar, the trade war weakened it, raising import prices and fueling inflation. Wages have risen slightly, but higher living costs are eroding real gains for many families.
Immigration restrictions have added to the strain, contributing to labor shortages in sectors from farming to healthcare. Meanwhile, Trump’s push to extend corporate tax cuts has sparked new debates about inequality and the ballooning federal deficit.
As Gerard Lyons of Netwealth1 puts it, policymakers are running out of tools: “Monetary policy’s ability to absorb shocks may now be constrained by the inflationary effects of tariffs.”
Global Ripple Effects
The U.S. remains the world’s largest economy, but its relative weight has slipped compared to decades past. With 80% of global trade not directly tied to America, other nations are finding ways to adjust. Europe and Asia are already exploring deeper trade ties, potentially bypassing the U.S. altogether.
Uncertainty, though, may be the most damaging factor of all. Companies hesitate to invest, supply chains stall, and markets wobble when they cannot predict what Washington will do next. Former CaixaBank chairman Jordi Gual2 calls it a “madman strategy”—unpredictability as leverage: “In geopolitics that may work, but in economics it breeds uncertainty, which undermines growth and stability.”
The Road Ahead
So far, Trump’s second-term economy has been defined by contradiction. Markets remain resilient, corporate America is upbeat, and some industries are benefiting. But the costs are rising: inflation, trade retaliation, fiscal stress, and deepening global divides.
The gamble is simple but risky—sacrifice stability now for the promise of long-term industrial revival. Whether that revival materializes, or whether the U.S. finds itself isolated in an interconnected world, will define the legacy of Trump’s economic experiment.
As Capital Economics’ Neil Shearing3 sums it up: “The issue is not just where the tariff policy lands—it is the wide range of possible outcomes. There are no clear historical precedents for this situation.”
Conclusion
Trump’s economic policies are bold and disruptive, reshaping the U.S. and global economy. But six months in, the jury is still out on whether they mark the start of a golden age—or a costly gamble with uncertain payoffs.
Sources
* Zolandz, Michael, et al. “Six Months Into Trump’s Second Term: Shifting Trends In U.S. Sanctions Policy And Enforcement.” DENTONS, July 22, 2025
https://www.dentons.com/en/insights/alerts/2025/july/22/six-months-into-trumps-second-term
* Stewart, Heather; and Partington, Richard. “In Economic Terms, Trump’s Tariffs Make No Sense At All.” The Guardian, April 4, 2025.
Notes
1. Neil Shearing – Group Chief Economist at Capital Economics, specializing in global macroeconomics; he holds a PhD in economics from the University of London.
2. Jordi Gual – Former Chairman of CaixaBank and professor at IESE Business School; he earned a PhD in economics from the University of California, Berkeley.
3. Gerard Lyons – Chief Economic Strategist at Netwealth and former adviser to the Mayor of London; he holds a PhD in economics from the University of London.