The 47th U.S. presidency marked a crossroads in history as Donald J. Trump was sworn back into office on January 20, 2025. Aided by Vice President J.D. Vance, the administration steered a path through a dynamic economic landscape. As we take a mid-year pause to consolidate our understanding of the unfolding economic scenario, let’s examine the Trump administration’s policy dynamics and their impacts on U.S. and global growth.
U.S. Economy and Growth: A Mixed Bag
Economic indicators released in mid-2025 indicate a modest GDP growth of about 2.4% in Q2 after a slight contraction in Q1. On the employment front, the unemployment rate stands at 4.1%. The economic scene was not rosy, with inflation measuring at the core CPI being around 2.7% to 2.9%. OECD forecasts predict a trimming down of growth to around 1.6% to 1.7% by the end of the year, along with inflation standing at approximately 3.9%.
Hard-line Tariffs and Trade Policy
Trump’s second presidency saw an aggressive tariff regime, imposed across China, the EU, Canada, and Mexico. Baseline rates have escalated up to 15-50% by the August 1 deadline. Trade relations have been in a flux, with an exception being the US-Japan trade agreement, buoying markets with its $550 billion investments and reduced import duties to around 15%. Trade negotiations are still ongoing with China, while tariff wars continue with Canada and Mexico. Interestingly, in May 2025, the Court of International Trade claimed that tariffs imposed under the IEEPA exceeded presidential authority, blocking their enforcement.
Effects of Trade Policy on GDP and Inflation
These policies have had a macro-economic impact, with an average household bearing a cost of approximately $1,296 in 2025, projected to rise to about $1,683 in 2026, and a projected reduction in market income of about 1.4%. Expected gradual pass-throughs may increase consumer prices by around 2% over two years.
International Outlook: Uncertain Times Ahead
The OECD warns of a global slowdown and has trimmed the U.S. growth forecast and projected slow global growth to about 2.9% for ’25-’26. Trade uncertainty has adversely affected UK firms while negotiations for a U.S.-U.K. agreement and a Pakistan deal are on before the August 1 deadline. Actions, often, have reactions. European boycott movements targeting U.S. goods and warnings issued over U.S. border policies reflect the backlash of the administration’s trade policy.
Conclusion
The 2025 American leadership, led by President Trump and VP Vance, has deployed aggressive economic policies that stirred national and international economic waters. With a global slowdown looming, the socioeconomic consequences remain to be driven as much by the policies’ execution as by their refinement in the face of challenges and shifting dynamics.