Higher tariffs, debt-fuelled spending and a shrinking migrant workforce are weakening US growth while adding to inflationary and financial pressures.

We are all familiar with Trump’s foreign policy failures. The quagmire of the Iranian war that he started at Netanyahu’s insistence. Trump’s betrayal of Ukraine and homage to the Russian autocrat, Putin. And how Trump has sacrificed US status and leadership by disavowing long-time US alliances.

On the other hand, Trump’s economic strategy gets little publicity here in Australia. This is strange because the forthcoming US election will mainly be determined by the ‘economy, stupid’. While the success, or otherwise, of Trump’s foreign policy will be of secondary importance to most Americans.

The major economic changes initiated by Trump that are likely to matter most have been:

A large increase in tariffs, but which have bounced backwards and forwards;

The big, beautiful budget stimulus, and now an election bribe of $5,000 for every adult citizen if the Republicans win the election;

Major cuts in migration and deportation of many former migrants.

The strange thing is that these policies are the opposite of traditional Republican economics. Ronald Reagan would denounce them.

What exactly Trump has achieved with a combination of more expensive imports, fiscally irresponsible handouts, and cuts in the supply of often essential workers?

According to Trump, other countries have been taking American jobs, and especially manufacturing jobs, through their exports to the US. In particular, he believes that countries which have a trade surplus with America must be unfairly pinching US jobs.

Trump’s tariffs have gone up and down like a yo-yo, but some countries like Canada and China have been hit with 50 per cent tariffs or even more. While even countries like Australia, with which the US has a trade surplus, have been hit with a 12.5 per cent tariff.

Overall, America’s effective tariff rate briefly topped 20 per cent, and even after falling back a little it is still at its highest rate since the 1940s.

The net result is that over the four quarters of 2025 the volume of US imports fell by 1.9 per cent but is expected to rebound by 6.5 per cent during 2026. While the volume of US exports increased by 1.1 per cent and an expected 5.4 per cent over each of the four quarters in 2025 and 2026 respectively.

Over the four quarters after Trump became president, manufacturing output in real terms increased slightly by 0.3 per cent – not much and no faster than previously – while manufacturing employment continued to........

© Pearls and Irritations