Trump says tariffs created financial miracle. Details say in any other case

By PAUL WISEMAN and CHRISTOPHER RUGABER, AP Economics Writers

WASHINGTON (AP) — Wanting again on the primary yr of his second time period, President Donald Trump boasts that he has resurrected the American economic system by imposing large import taxes on overseas merchandise.

He made his case in a latest opinion piece in The Wall Avenue Journal, chiding the paper and critics, together with mainstream economists, who predicted that tariffs would backfire, elevating costs and threatening progress. “As a substitute,” the Republican president wrote, “they’ve created an American financial miracle.”

However the proof he provides is commonly off-base or flawed altogether.

Right here’s a have a look at the info round Trump’s evaluation of tariffs:

CLAIM: “Simply over one yr in the past, we have been a ‘DEAD’ nation. Now, we’re the ‘HOTTEST” nation wherever on the earth!’ ’’

THE FACTS: This can be a commonplace assertion from Trump. However the U.S. economic system was hardly “useless’’ when Trump returned to workplace final yr. And in Trump’s second time period, it’s carried out strongly — after getting off to a bumpy begin.

In 2024, the final yr of the Biden presidency, American gross home product grew 2.8%, adjusted for inflation, sooner than any rich nation on the earth besides Spain. It additionally expanded at a wholesome charge from 2021 via 2023.

The numbers for all of 2025 aren’t out but. However in the course of the first three quarters of the yr, Trump’s tariffs — or the specter of them — delivered blended outcomes for the American economic system.

From January to March, U.S. GDP really shrank for the primary time in three years. The primary perpetrator was straightforward to establish: a surge in imports, that are subtracted from GDP, as American firms rushed to purchase overseas merchandise earlier than Trump may impose tariffs on them.

However progress rebounded within the second half of the yr. From April via June, the economic system expanded at a wholesome 3.8% tempo. And from July via September, it grew even sooner — 4.4%. An enormous a part of the surge was a drop in imports, seemingly reflecting Trump’s tariffs in addition to the truth that importers had already stocked up in the beginning of the yr. Sturdy shopper spending additionally drove financial progress.

Trump additionally likes level to stable beneficial properties within the U.S. inventory market. He famous that shares hit new highs 52 occasions in 2025. It’s true that the American inventory market did properly final yr. Nevertheless it underperformed many overseas inventory markets. The benchmark S&P 500 index climbed 17% — a pleasant acquire however wanting a 71% surge in South Korea, 29% in Hong Kong, 26% in Japan, 22% in Germany and 21% in the UK.

CLAIM: “Annual core inflation for the previous three months has dropped to simply 1.4% — far decrease than nearly anybody, apart from me, had predicted.”

THE FACTS: The president is utilizing cherry-picked information to vastly exaggerate the place inflation stands.

His determine for annual inflation prior to now three months — which excludes the unstable meals and vitality costs — is low, however displays information distorted by the federal government shutdown in October and November, which disrupted the federal government’s information assortment and compelled the company that compiles the figures to plug in tough estimates in some classes that artificially lowered total inflation.

Annual core inflation for the ultimate six months of 2025 is greater at 2.6%. That’s down from January 2025’s degree however about the place it was in October 2024. Total, inflation has leveled off this yr, and was 3% in September earlier than the federal government shutdown, the identical because it had been in January 2025.

It’s true that inflation hasn’t been as excessive as many economists apprehensive it will be when Trump began rolling out tariffs final spring, however that’s partly as a result of lots of the “Liberation Day” tariffs have been withdrawn, lowered or riddled with exemptions. When Democrats received some high-profile elections final yr by highlighting “affordability” considerations, the administration rolled again present or deliberate tariffs on espresso, beef and kitchen cupboards, for instance, a backhanded acknowledgment that the duties have been elevating costs.

The affect of tariffs could be extra clearly seen in core items costs, which additionally exclude meals and vitality. Earlier than the pandemic, core items prices sometimes barely rose — and even fell — annually, however final December they have been 1.4% greater than a yr earlier. That was the biggest enhance, exterior the pandemic, since 2011.

Alberto Cavallo, an economist at Harvard and the writer of a research on the affect of tariffs cited by Trump in his op-ed, has discovered that Trump’s tariffs have boosted total inflation by roughly three-quarters of a share level.

CLAIM: “The information exhibits that the burden, or ‘incidence,’ of the tariffs has fallen overwhelmingly on overseas producers and middlemen, together with massive firms that aren’t from the U.S. In response to a latest research by the Harvard Enterprise Faculty, these teams are paying not less than 80% of tariff prices.”

THE FACTS: The research Trump cited seems to conclude the alternative of what Trump claimed. Authored by Cavallo and two colleagues, it finds that “U.S. shoppers have been bearing roughly 43% of the tariff-induced border value after seven months, with the rest absorbed principally by U.S. corporations.” Cavallo stated by electronic mail that import costs hadn’t fallen a lot, “which suggests overseas exporters didn’t scale back their pre-tariff costs sufficient to shoulder a big share of the burden.″

CLAIM: “We’ve got slashed our month-to-month commerce deficit by an astonishing 77%.”

THE FACTS: This declare includes extra cherry-picking, reflecting the proportion drop from a really excessive commerce deficit in January 2025, when the president took workplace, to a super-low deficit in October.

The story is extra sophisticated than the president makes it. The commerce deficit — the hole between what the U.S. sells different international locations and what it buys from them — has really risen since he returned to the White Home.

From January via November in 2025, the U.S. amassed a commerce deficit of practically $840 billion, up 4% from the identical interval of 2024. Within the first three months of 2025, importers rushed to purchase overseas merchandise — earlier than Trump may slap tariffs on them. After that, month-to-month commerce deficits got here in constantly decrease than they have been in 2024. However the January-March import surge was so large that the 2025 year-to-date commerce deficit nonetheless exceeds 2024’s.

CLAIM: “I’ve efficiently wielded the tariff software to safe colossal Investments in America, like no different nation has ever seen earlier than. … In lower than one yr, we now have secured commitments for greater than $18 trillion, a quantity that’s unfathomable to many.’’

THE FACTS: Trump did, actually, use the tariff menace to pry funding commitments from America’s main buying and selling companions. The European Union, for example, pledged $600 billion over 4 years.

However Trump hasn’t stated how he got here up with $18 trillion. The White Home has printed a determine of $9.6 trillion, which incorporates non-public and public funding commitments from different international locations.