Trump’s Tariffs: Economic Catastrophe or Newfound Resilience?

While there was an abundance of voices forecasting a financial catastrophe as a result of President Donald Trump’s approach to tariffs, these harbingers have recently grown quite. In the early days of Spring, we were inundated with warnings of a grim economic outlook. The media and global challenges from all sides have since shifted their focus, but we remember. Professor of Economics at Columbia University, Joseph Stiglitz, was one of many who vehemently argued that the implications of tariffs would be deleterious for both the U.S. and the global economy.

Moody’s Analytics Chief Economist, Mark Zandi, went as far as suggesting there was a 40% chance of recession by the year 2025, attributing this entirely to the imposition of Trump’s tariffs. Even billionaire investor and Trump supporter, Bill Ackman, forecasted an ‘economic nuclear winter’, signaling a potential global downturn. These perspectives were just the tip of the iceberg of critique. It seemed the consensus among the ‘expert class’ was that we were on the brink of a financial disaster.

Dire predictions circulated of rampant inflation, economic downturn, drastic product shortages, and estranged trading partners. Contrary to these, what we have observed are stable inflation rates, consistent GDP growth, low rates of unemployment, no significant product shortages, and nations eager to negotiate. There are certainly still areas for improvement, but the situation is far from the economic dystopia some critics were seemingly expecting.

The transatlantic trade war that was anticipated didn’t come to pass. Thanks to a significant agreement with the European Union (EU), that potential crisis has been averted. In fact, as it turns out, the doom-and-gloom forecasts were somewhat misplaced. The reality is that other economies have a greater dependence on the U.S. than vice versa. The EU’s willingness to commit to substantial economic investments and eliminate tariffs on U.S. goods, in exchange for a flat 15% tariff, speaks volumes.

Trump’s robust negotiation skills have resulted in what seems like a fair deal, especially when compared to the 30% the EU was previously facing. Furthermore, Japan has agreed to lower its tariffs and open its markets in exchange for a 15% tariff on goods coming into the U.S. The Philippines, too, decided to remove all tariffs on U.S. goods in return for a 19% tariff on its exports. The United Kingdom followed suit, decreasing tariffs on cars, steel, and other U.S. imports, while accepting a baseline 10% tariff on its exports.

Even the perceived irreparable trade relations with China have seen positive progress. A temporary deal was struck in May 2025, addressing trade imbalances and instituting a 30% tariff on Chinese exports and a 10% tariff on U.S. exports. We can expect more encouraging news as time progresses, particularly with regard to potential agreements with India, Mexico, Canada, and other nations.

One clear takeaway from recent dealings is that the United States is demonstrating a newfound economic resilience and determination. While initially the implementation of tariffs seemed somewhat disarrayed and haphazard, in hindsight, this may very well have been a necessary shock to the global economy. It prompted nations to realize the urgency of engaging in fair negotiations to avoid the economic penalty.

The positive outcomes already evident, beyond those that are yet to materialize from current and future trade agreements, are a testament to this approach. June saw the U.S. record its first trade surplus in years, having earned $27 billion more than it spent. By contrast, the figure for June 2024 was a deficit of $71 billion. The revenues from tariffs, also exceeding anticipated amounts, will undoubtedly improve the country’s balance sheet.

Granted, it may take a while for some of the most significant benefits to manifest, especially as companies begin to establish facilities in America to bypass the tariffs associated with offshoring. Sure, this may result in some goods being priced higher, but in the long term, the prospects of increased local wages and opportunities should rise, strengthening the domestic economy.

Reflecting on the decision to impose tariffs on aluminum and steel in 2018, it’s clear the cost of constructing our economy on such unstable foundations. Since the beginning of the Bush era, trade deficits totaled $12 trillion, and the first decade of this century witnessed the loss of 55,000 factories and 6 million manufacturing jobs. A shift away from this trend is not only refreshing but much needed.

For years, even decades, we’ve experienced leadership that displayed an unfortunate willingness to put America’s economic interests second in the context of international trade. The motivations for such actions could range from a misguided sense of international reparations to the allure of cheap goods despite their long-term costs, or just an overwillingness to appease foreign leaders.

It’s quite challenging to pinpoint why exactly this happened, but one fact remains irrefutable: focusing on ‘fair’ instead of ‘free’ trade is a strategic necessity to nurture and sustain a robust economic powerhouse. Further, negotiators need to ensure that trading agreements benefit the domestic economy, ensuring sustainable growth and prosperity for future generations. All in all, it’s clear that America is reasserting its footing on the global trading stage.