section_path: Impacts/United States/Economic impacts
section_name: Economic impacts
paragraph_text: Economic impacts
  
  Although Trump's first-term economic policy featured lower and more targeted tariffs with many exceptions, Trump promised higher rates, broader impacts, and few exceptions in his second term. According to the Tax Foundation, the first Trump administration imposed new tariffs on approximately $380 billion worth of imports. Comparatively, the second Trump administration was expected to impact more than $1.4 trillion of imports by April 2025.
  
  At the start of his second term, confusion over rapidly fluctuating tariff levels and other economic policies created significant uncertainty for businesses and economists, creating a chaotic environment for investment, business planning, and pricing, and posing serious concerns for consumers as well. US GDP grew by 2.8% in 2024, the year before Trump's inauguration. In March 2025, the Federal Reserve lowered its 2025 growth forecast from 2.1% to 1.7%, while the OECD projected a decline to 2.2% in 2025 and 1.6% in 2026. The Federal Reserve also increased average inflation expectations from 2.5% to 2.7%. The US dollar value also decreased massively following the announcement compared to other currencies. Goldman Sachs estimated that tariffs imposed by Trump would remove up to 500,000 jobs in the US; thousands of layoffs had already taken place as of April 2025. By April 4, JPMorgan Chase forecasted a recession within the year.
  
  As noted in April 2025 by the editor of The Economist, Trump's imposition of sudden and extreme tariffs fails to account for the fact that US-produced goods " long supply chains, where companies get supplies from many different countries, and where the US has specialized in services and higher value-add manufacturers." Furthermore, if the end goal is to rebuild domestic manufacturing by implementing permanently high tariffs, not only would parts and materials likely become difficult or impossible to acquire, but, seeing as the United States only accounts for 15% of global trade, the international system is capable of carrying on with a reduced US role—a scenario which may well prove detrimental to the U.S. economy.
  
  Early April 2025 saw a 64% drop in ocean container bookings from China to the US, a collapse of trade with the potential to cause retail shortages within a month or two. Supply chain problems also loom for medicines such as the blood thinner heparin. Medical device makers have also raised alarm over potential disruptions to their integrated global supply chains. Surgical tools, MRIs, ventilators, pumps and other equipment are likely to rise in price. Large consumer goods groups expressed pessimism about future earnings, with Pepsico and Procter & Gamble lowering their financial outlooks for the year while Unilever and Nestlé said their consumers would face higher prices. Walmart and Target executives warned Trump of the impact tariffs would have on their business in an April 21 White House meeting. Norfolk Southern and Boeing warned that tariffs would impact their supply chains, and AT&T and Verizon said they would lead to inflation in communications technology goods such as routers and handsets. Thrift retailers reported an improved economic outlook as a result of tariff pressures on other retailers. According to U.S. Senate Minority Leader Chuck Schumer, American households will spend about $4,000 more annually because of the tariffs imposed by Trump. Schumer's figure is roughly in line with four independent estimates identified by PolitiFact.
  
  Following Trump's global tariff announcements and worldwide trade war on April 3, the Yale Budget Lab calculated the average effective US tariff to be 22%, up from 11% before the announcement and at the highest level since 1909. Inflation Insights stated the weighted average tariff rate was set to rise to around 25% to 30%, up from 2% in the prior year. The Cato Institute and other economists stated that the tariffs would "approach levels not seen since the Smoot-Hawley Tariff Act of 1930", which The Wall Street Journal put at roughly 20% and lasted until the General Agreement on Tariffs and Trade in 1947. After adjusting for inflation, the tariffs amounted to the largest tax hike in U.S. history and triple the tax increase to fight World War II.
  
  Economist Michael Hudson has argued that the tariffs have the potential to disrupt the global economy by disrupting the balance of payments between the United States and its foreign debtors. By reducing the export trade between the United States and countries targeted by the tariffs and raising the cost of dollar-denominated goods, the US makes it more difficult for those countries to pay their dollar debts. Hudson believes this could cause a debt crisis, and compares it to the historical examples of the Latin American debt crisis and the inter-allied repayment of loans during the world wars.