Gains and losses for the U.S. economy after a year of retaliatory tariffs.

One year after “Liberation Day,” the White House highlighted progress on attracting investment and reducing deficits, while experts and investors cautioned that tariff-driven costs could slow growth.

Tariff timeline and policy shifts

On April 2, 2025, President Donald Trump announced retaliatory tariffs ranging from 10% to 50% with all trading partners. The tariff approach then shifted as the administration secured agreements in the following months.

By February 20, the Supreme Court struck down the tariff levels cited under the International Emergency Economic Powers Act (IEEPA) of 1977. A few hours later, Trump announced an additional 10% import tax under Section 122 of the Trade Act of 1974 for a 150-day period.

Separately, tariffs applied under Section 232—affecting imports including steel, semiconductors, aluminum, and other products—remained in place.

White House claims: agreements, investment, and deficit reduction

The White House said the U.S. economy has become “more resilient, more competitive, and safer.” White House spokesperson Kush Desai cited “more than 20 new trade agreements,” “trillions of dollars of investment in manufacturing,” lower drug prices, and a reduced goods trade deficit.

A comparison graphic showed the goods trade deficit from April 2024–February 2025 (red) versus April 2025–February 2026 (gold).

Trade deficit and bilateral balance data

Administration data indicated the U.S. goods trade deficit fell 24% in April 2025–February 2026 versus the same period a year earlier. The deficit with China fell 32%, and the deficit with the EU fell by nearly 40%. The U.S. bilateral goods trade balance improved with more than 63% of partners.

Industrial production and tariff-cost pass-through

The industrial production index reached its highest level since 2019. The White House cited research from the Bank of England suggesting that export prices to the United States fell while export prices to other countries did not, indicating foreign manufacturers were sharing tariff costs by lowering export prices.

Economic performance: growth, investment, and trade

Despite the administration’s claims, economists David Hebert of the American Institute for Economic Research and Donald Boudreaux of George Mason University said the picture is more nuanced when comparing 2025 with 2024.

• Real GDP grew 2.1% in 2025, versus 2.8% in 2024.
• Job growth rose 0.5%, compared with 1.2% in 2024.
• FDI rose 1.2% for the year, compared with 2.7% in 2024.
• Domestic investment slowed, up 2% versus 3% in the prior year.

Real imports in 2025 were 4% higher than in 2024, reaching $3.4 trillion, largely attributed to front-loading by firms. The goods deficit rose by about 2% to $1.24 trillion.

“If the economy was ‘dead’ in 2024, there is no evidence that tariffs revived it,” the two economists said.

Consumer cost burden and inflation effects

Tariffs also imply higher costs for consumers. In August 2025, the Federal Reserve reported that households bore 94% of tariff costs; by year-end, the burden eased but remained at 86%.

Retailers including Walmart, Best Buy, and Macy’s raised prices on some items while offsetting costs. Food prices rose 2.9% from a year earlier, and the Yale Budget Lab estimated a typical American household faced about $1,500 more in annual food costs.

Analysis: tariffs, supply chains, and growth risk

Economist Douglas Irwin of Dartmouth said more than half of U.S. imports are inputs for production. In his view, tariffs shift resources toward more expensive domestic goods rather than cheaper imports. The combination of higher production costs and higher consumer prices, he said, will slow growth.

Political and market signals

By March 2026, a CNN poll found 31% of voters supported Trump’s economic policies, the lowest since his tenure began, down from 44% a year earlier. The poll also showed 65% said the policies worsened the economy, the highest figure recorded under Biden.

In markets, the Dow Jones rose 13%, the S&P 500 rose 16%, and the Nasdaq rose 20% in 2025. The article noted these gains lagged most developed markets, though they outperformed in the previous decade.

Examples cited included the DAX rising 23% (Germany), the Nikkei 225 rising 26% (Japan), the S&P/TSX rising 29% (Canada), and the Kospi rising as much as 76% (South Korea). The article said forward-looking financial markets suggest the global economy continues to grow despite reduced access to the U.S. market.

Investor and analyst perspectives

Russ Mould, Investment Director at AJ Bell, said investors are re-evaluating exposure to U.S. assets due to tariffs, Federal Reserve independence, geopolitical developments in Latin America and the Middle East, and high market valuations and the federal deficit.

“Investors appear to be weighing capital allocations more carefully in a post-‘Liberation Day’ world,” Mould said.

He added that while U.S. stock markets recovered strongly from the “Liberation Day” trough, they are no longer the top priority as they were for much of the period since the Global Financial Crisis of 2008–09.

Analyst Dorian Carrell of Schroders said uncertainty related to Iran conflicts, private credit strains, and high capital spending on AI are factors prompting international investors to reconsider strategies.

Broader trade implications and outlook

The Wall Street Journal argued that countries are compensating for the loss of the U.S. market by removing barriers and expanding trade among themselves. Economist David Hebert was quoted saying: “The world is not deglobalizing but re-globalizing around rule-abiding partners rather than those who use tariffs as a tool of coercion.”

White House spokesperson Kush Desai remained optimistic, saying: “This is only the beginning of the President’s global trade transformation: as these investment and trade agreements stay in effect and more deals are signed, Americans can trust that the best is yet to come.”