U.S. President Donald Trump began his inaugural address Jan. 20 with these words: “The golden age of America begins right now.”
Most Americans do not yet feel they are living in a more prosperous age.
To the contrary, they are afraid that the inflation Trump vowed to destroy will come roaring back. They fear that tens of thousands of jobs are at risk from Trump’s tariffs and massive federal layoffs.
And that the Trump administration will reduce Social Security, Medicaid and veterans’ benefits to close an immense federal budget gap.
In recent weeks, investors spooked by tariff uncertainty have sold off hundreds of billions of dollars in stocks.
Americans are right to be concerned.
Trump’s tariffs on Canada, Mexico and China will amount to an annual tax increase for the median American household of $1,200 (U.S.), according to the Washington, D.C.-based Peterson Institute for International Economics.
The Wall Street Journal reports that Trump’s “tariffs are paralyzing business and scaring consumers.”
This month, Trump has imposed, modified, then largely postponed tariffs, then threatened new surtaxes.
Adding to that uncertainty are Trump’s slash-and-burn firing of thousands of federal employees and abrupt cuts in the budgets of government departments and agencies.
Those cuts have a knock-on effect on businesses and universities across the country that are losing government contracts.
The U.S. economy is expected to lose about 500,000 jobs this year.
That’s a recent estimate, before Trump’s tariffs, if all of them are fully enacted, inflict their maximum negative effect on employers reliant on Canada, Mexico and China — the targets of Trump’s tariffs so far — for the goods they sell or the raw materials they buy.
Morgan Stanley Research forecasts that U.S. inflation, excluding volatile food and energy prices, will rise to an average of 2.7 per cent in 2025.
Goldman Sachs sees inflation rising to an average of three per cent, compared with its estimate of 2.1 per cent in the absence of Trump’s tariffs.
Canadian inflation was measured at 1.9 per cent in January, down from the 2024 average of 2.4 per cent.
The U.S. Conference Board reported that Americans’ economic expectations had dropped in February by the largest amount since the early months of the pandemic, to 72.9 points on its consumer confidence index.
A reading below 80 signals a potential recession, the board says.
Trump’s agenda “will slow economic growth,” Michael R. Strain, an economist at the American Enterprise Institute, a conservative think tank, told the New York Times last week.
“It will take money out of people’s pockets. It will increase the unemployment rate. It will cost people jobs. It will make American businesses less competitive.”
Trump inherited a strong U.S. economy and might feel it can withstand his radical policies.
They include the biggest tariff hike in a century, and a plan to deport two million immigrants who make up a large portion of the workforce in the health care, agriculture, construction and hospitality sectors.
Trump warned in his State of the Union address March 4 that “there’ll be a little disturbance, but we’re OK with that.”
The stock market, for one, is not OK with the slump in consumer spending and business investment, which could weaken corporate profits.
The S&P 500 index is down 8.6 per cent from its peak earlier this year.
Blue chip stocks have dropped sharply from their 2025 highs.
The losers include JPMorgan Chase (down 17 per cent); Citigroup (20 per cent); Caterpillar (20 per cent); Nvidia (24 per cent); Best Buy (13 per cent); Costco Wholesale (13 per cent); Intel (27 per cent) and Dell Technologies (25 per cent).
American farmers are angry at a trade war that might cost them access to export markets like Canada and Mexico that retaliate against the Trump tariffs. Meanwhile, the U.S. tariffs will hike the cost of Canadian potash used in almost all U.S. crop production.
“Contrary to what the president thinks, this means nothing but pain,” Aaron Lehman, head of the Iowa Farmers Union, said of Trump’s trade war.
The Trump administration’s policies are “pure chaos,” Heather Boushey, who served on the Biden administration’s Council of Economic Advisers, told Bloomberg last week.
Trump and his advisers “have a very clear plan that will require cutting support for Medicaid and other really important programs,” Boushey said.
To be charitable, in the long run Trump’s policies may bring offshored jobs back to America and invigorate U.S. industries that have lost their dominance to foreign rivals.
But that’s not how the tariffs in Trump’s first presidency worked out.
The American economy lost 2.7 million jobs on Trump’s earlier watch. And the U.S. trade deficit increased by more than 36 per cent.
Upfront pain for promised long-term gain is the current mantra of the Trump White House.
For now, at least, it is proving to be a tough sell.
