Trump’s Economy: Boom, Bust, or Just Hype?

Just like many of us have one big dream, Trump’s is to return to the 1920s, when America thrived on its home market and remained largely isolated from the world. From sweeping tax cuts to aggressive tariffs on multiple nations, he appears determined to revive the Roaring Twenties by bringing back American manufacturing and consumer culture. But in today’s globalized world, is that truly achievable? 

First off, it is important to remember that in order to implement his often controversial economic policies, President Donald Trump must operate within several key frameworks, particularly since the Federal Reserve, also known as the Central Bank, functions independently—a situation he has long resented. This independence, however, ensures that our economy is based on long-term stability rather than on short-term political goals. While Trump cannot directly control the Fed, he can, however, influence tax policy (with the support of Congress), which is truly a hallmark of his governance style. In addition to not being able to shape the Fed as he wishes, Trump has also always been somewhat critical of its chair, Powell, whom he himself nominated in 2018. However, this dynamic is bound to change, as in 2026, Trump will have the opportunity to appoint the next Fed Chair, a move that is likely to align much more closely with his vision for a “great America.”

Regarding his corporate tax cuts, particularly those included in the Tax Cuts and Jobs Act of 2017, which he seeks to make permanent, these primarily benefit large corporations and the wealthy, dare I say the oligarchs, while proving to be very costly for the average American. The United States is already facing a high national federal budget deficit, which stands at a significant percentage of GDP—a situation that can become dangerous, as it is closely tied to national debt. Believe it or not, like almost everything except the accumulation of oligarchic wealth, this situation has its limits. As of February 6th, this debt limit has already been surpassed. 

But what impact will Trump’s policies have on economic growth?

Certainly, as a businessman, many of his actions target market stimulation, including this extension of tax cuts as I’ve mentioned and deregulation. Combined, these policies would honestly ultimately boost competition and therefore drive prices down. In addition, America has returned to traditional energy sources which would also contribute to those lower prices. Now from an international perspective, Trump’s growing ties with tech leaders like Elon Musk could indeed position the U.S to gain a comparative advantage (ability to produce goods at a lower opportunity cost than others) in these revolutionary industries. While these tech markets remain bullish, their dominance would inevitably contribute to significant economic growth.

Now, on the downside, however, Trump’s trade wars have fueled inflation, which could potentially counteract the benefits of his pro-business policies. Additionally, national debt is an issue, as rising debt levels would increase interest rates, negatively impacting American investors, who are key drivers of economic growth.

So to ensure growth, his business-oriented mindset must outweigh his protectionist approach. 

Ultimately, 2025 will depend on how these policies balance out, likely resulting in a year of near stagnation rather than strong economic expansion.