Understanding the 2025 U.S. Administration: Trade Policies, Economic Outlook, and International Scene
Following the swearing-in of the 47th U.S. President, Donald J. Trump, alongside Vice President J.D. Vance on January 20, 2025, there have been significant changes in the trade and economic policies of the country. This blog aims to give a comprehensive overview of the economic indicators, trade policies, and global implications of the new administration’s strategies.
Current U.S. Economy & Projection
As of mid-2025, the U.S. economy has been coping with varying indices. One notable point is that the GDP growth is at approximately 2.4% in Q2 following a minor contraction in Q1. Meanwhile, unemployment is moderately stable at around 4.1%. The inflation core CPI is hovering between 2.7% to 2.9%.
According to expert outlooks such as those provided by the OECD, projections suggest potential growth between 1.6% to 1.7% and surging inflation rates of ~3.9% by the end of 2025. Major milestones reported by the treasury include tariff revenues of around $200 billion in FY2025, blue-collar wage growth at ~1.7%, and a significant upswing in capital expenditures by ~16.6% in H1 2025.
Trade Policies & Implications
The Trump administration has adopted an aggressive tariff regime across China, the EU, Canada, and Mexico, setting baseline rates around 15% to 50% effective by the August 1 deadline. Various trade relations are at different stages – negotiations with the EU are ongoing while a substantial agreement with Japan reducing import duties to around 15% has been reached.
However, these policies have not been without critique. The Court of International Trade ruled in May 2025 that tariffs imposed under the IEEPA exceeded presidential authority, thus preventing their enforcement. According to economic projections, the average household cost could increase from ~$1,296 in 2025 to ~$1,683 in 2026, creating a predicted reduction in market income of approximately 1.4%.
The International Landscape
The OECD warns of a global slowdown, reducing U.S. growth and increasing inflation rates. These factors have led to a trimmed international growth prediction to around 2.9% in 2025-26. Trump’s trade policies have had a significant yet varied effect on international entities. For example, the decision-maker panel revealed that U.K. firms have experienced a relatively minor negative impact due to their low exposure (approximately 3% of revenue comes from the U.S.).
Current Responses & Moving Forward
In response to the U.S. policies, there has been a visible social and political backlash, including a developing European boycott movement against U.S. goods and travel warnings related to U.S. border policies. Amid this milieu, negotiations continue to take place with countries such as the U.K. and Pakistan.
As we tread further into 2025, the U.S. continues to navigate the ambit of trade and economic policies under the new administration. Given global dynamics and internal developments, it remains to be seen how these policies will evolve and the lasting effects they will have on the domestic and global economic landscape.