Gemini: The administration has succeeded in its “America First” goals of passing tax cuts, imposing tariffs, and dismantling social programs. But it has failed, by its own actions, in...

...its “Make America Affordable” goal. The administration’s prowess lies in its ability to execute its agenda, not in the economic coherence or stability of that agenda.

The ‘America First’ Economy in 2025: An Analysis of the Trump Administration’s Economic Policies and Outcomes

by Gemini 2.5 Pro, Deep Research. Warning, LLMs may hallucinate!

The 2025 Economic Landscape: Stated Goals vs. Measured Outcomes

The second Trump administration was inaugurated on January 20, 2025, inheriting an economy characterized by resilient growth, low unemployment, and persistent, though declining, inflation.¹ The administration’s economic platform, articulated during the campaign and formalized upon taking office, centered on a dual mandate: restoring American industrial sovereignty through protectionist trade policies and, simultaneously, alleviating the cost-of-living pressures on American households.³

An analysis of the first ten months of the administration reveals a period of intense policy implementation, marked by significant legislative victories, a radical reorientation of U.S. trade policy via executive power, and a deliberate political confrontation that culminated in the longest government shutdown in U.S. history.

The economic effects of these measures are complex and deeply contradictory. The administration has successfully executed its core political agenda, but the economic consequences of these actions are often in direct conflict with one another. This report analyzes the measures that have had a positive effect on the U.S. economy and those that have had a negative effect, concluding with an overall judgment on the administration’s economic prowess.

The Administration’s Stated Economic Agenda

The administration’s economic philosophy was formally established on its first day in office. The January 20, 2025, Presidential Memorandum “America First Trade Policy” laid out a plan for “transformational change necessary to reverse our country’s economic decline” and instructed federal agencies to “undertake rapid, unprecedented work to put America First on trade”.³

This “America First” doctrine was built on four central, and at times conflicting, pillars:

1. Combating Inflation and Enhancing Affordability: The administration’s most prominent public-facing goal was to “make America affordable again”.⁴ In his inaugural address, President Trump pledged to “direct all members of my cabinet to marshal the vast powers at their disposal to defeat what was record inflation and rapidly bring down costs and prices”.⁵ This was a consistent theme, with the president promising as late as January 7, 2025, “I think you’re going to see some pretty drastic price reductions”.⁴

2. Unleashing American Energy: The primary mechanism for achieving affordability was identified as domestic energy production. The administration views high energy costs as a key driver of inflation.⁵ To counter this, the president immediately declared a “national energy emergency” ⁵, issuing executive orders to “unleash America’s affordable and reliable energy” ⁷ and promote a policy of “drill, baby, drill”.⁵ The stated goal was to use America’s “liquid gold” to lower prices, refill the Strategic Petroleum Reserve, and spur a manufacturing renaissance.⁵

3. Broad-Based Tax Reduction: A central fiscal objective was the renewal and expansion of the 2017 Tax Cuts and Jobs Act (TCJA).⁴ This was framed as a populist measure, with promises to create “no tax on tips” and other breaks for the middle class.⁴

4. Protectionist Trade Reform: The administration’s most radical policy departure was its plan to fund its tax cuts. In a January 5, 2025, social media post, the president stated the tax cuts “will all be made up with tariffs, and much more, from countries that have taken advantage of the U.S. for years”.⁴ This set the stage for a new “External Revenue Service” to collect “massive amounts of money pouring into our treasury coming from foreign sources”.⁶

This agenda established a foundational, first-order conflict that has defined the economic trajectory of 2025. The administration simultaneously vowed to lower prices and “end inflation” ⁴ while proposing to pay for its fiscal agenda with tariffs.⁴ This is a critical incoherence; a wide consensus of economic analysis demonstrates that tariffs are, by definition, a tax on domestic importers and consumers, which raises prices.⁶ Models from J.P. Morgan projected the tariff policy would boost consumer prices by 1.0-1.5% ¹¹, and the St. Louis Federal Reserve calculated that tariffs were responsible for a significant share of recent core inflation.¹² The administration’s two core policies—affordability and protectionism—are thus working in direct opposition, creating a “push-pull” effect on the U.S. economy.

The Macroeconomic Scorecard (Through Q3 2025)

The economic data from the first three quarters of 2025 provide a volatile and complex backdrop for these policy battles. It is crucial to note that this official data stream largely ceases after September, a crisis detailed in the following section.

• Gross Domestic Product (GDP): The U.S. economy experienced extreme volatility in the first half of the year. The first quarter of 2025 saw real GDP contract at an annual rate of 0.6%.¹³ Pro-administration analysts from the Heritage Foundation argued this headline number was misleading, claiming that “a quick glance under the hood shows the data points to a much stronger economy than the headlines suggest”.¹⁵ This was followed by a sharp rebound in the second quarter, with real GDP increasing at an annual rate of 3.8%.¹³ The Bureau of Economic Analysis (BEA) noted this increase was “primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending”.¹⁴

• Inflation (Consumer Price Index): The administration’s primary target, inflation, has proven “sticky” and remains well above the Federal Reserve’s 2% target.¹⁷ The year-over-year CPI increased from 2.9% in August 2025 to 3.0% in September 2025.¹⁸ Core inflation, which strips out food and energy, also stood at 3.0% in September.¹⁹ Inflation nowcasts from the Cleveland Federal Reserve for October and November 2025 suggest the rate remains lodged at approximately 2.9% to 3.0%.²¹

• Labor Market: The labor market stabilized but showed signs of softening. The unemployment rate, after hitting 4.1% in June, rose to 4.2% in July and 4.3% in August 2025.²² Monthly job growth moderated from an average of 55,000 per month in the second quarter to 51,000 per month in July and August.²⁴ In a November 3 statement, the Treasury Department noted this moderation was driven by two administration policies: “the shedding of federal government jobs” (a “pro-efficiency” goal) and, critically, “Forced deportation and voluntary self-deportation of illegal immigrants has reduced labor supply”.²⁴

Financial Markets and Trade: Financial markets have been highly reactive to policy. The S&P 500, which started the year around 6,040 (Jan 31) ²⁵, experienced sharp sell-offs, such as a nearly 700-point Dow drop in March after the administration’s tariff plans were “taken at its word”.⁴ However, the market has trended upward, closing October at 6,840 ²⁵, buoyed by the prospect of deregulation and tax cuts.²⁶ The trade deficit, a key target of the administration, remains vast. The goods and services deficit was recorded at $78.3 billion in July ²⁷ and an advance estimate of $85.5 billion in August.²⁸

The “Data Vacuum”: A Crisis of Measurement

Any economic analysis of 2025 is fundamentally compromised by a critical, self-inflicted event: the 43-day federal government shutdown that began in early October and ended on November 13, 2025.³³

This shutdown, the longest in U.S. history ³³, created an “unprecedented data vacuum” ³⁰ by shuttering the primary statistical agencies of the U.S. government. The Bureau of Economic Analysis (BEA) and the Bureau of Labor Statistics (BLS) ceased operations, halting the collection, processing, and release of all major economic indicators.²⁹

The negative impact of this “data blackout” ³⁵ is profound. Key economic reports for October and the third quarter, including the official Q3 GDP estimate, the October jobs report, and the October CPI and PPI reports, were indefinitely postponed.³⁰ The consequences are severe:

• Permanent Data Loss: The BLS relies on in-person data collection for much of the CPI ³¹ and the household survey for the unemployment rate. Experts have warned that because of the shutdown’s length, the October 2025 unemployment rate may be permanently lost, and the October jobs data will be a “partial blind spot in America’s official record”.³¹

• Blinding Policymakers: This data vacuum has forced the Federal Reserve and other policymakers to “fly blind”.³⁵ Fed Chair Jerome Powell described the situation as “driving in the fog” ⁴⁰, as the central bank must make critical interest rate decisions without reliable data on inflation or employment.³⁵

• Undermining the Administration’s Narrative: The shutdown has created a severe political problem for the administration itself. Pro-administration voices at the Heritage Foundation and America First Policy Institute (AFPI) wish to claim the economy is “soaring”.⁴¹ However, the shutdown literally stopped the official scorekeepers from publishing the data. This allows the economic narrative to be defined not by official data, but by the “affordability problems” ⁴³ and rising costs that voters feel—a narrative that polls show is blaming the administration’s own policies.⁴³ The data vacuum represents a prioritization of political brinkmanship over the fundamental tools of economic measurement and management.

The “One Big Beautiful Bill Act”: A Victory for Growth or a Fiscal Reckoning?

The administration’s signature legislative achievement in 2025 was the “One Big Beautiful Bill Act” (OBBBA), a sweeping reconciliation bill passed along partisan lines ⁴⁵ and signed into law on July 4, 2025.⁴⁶ This legislation serves as the central vehicle for the administration’s fiscal agenda, combining traditional supply-side tax cuts with new populist spending priorities and offsets.

Its allies, such as the America First Policy Institute, have celebrated the OBBBA as “the largest tax cut and pro-business legislation in American history”.⁴⁹ However, non-partisan analyses project it will add trillions to the national debt, creating a sharp conflict between its positive short-term stimulus and its negative long-term fiscal and economic drag.⁵¹

Positive Effects: Pro-Growth Supply-Side Reforms

The primary positive economic effect of the OBBBA is the policy certainty it provides for business investment, combined with targeted tax relief for individuals. The law’s proponents, such as the Tax Foundation, praise its focus on “neutrality and stability”.⁵⁴

Corporate and Investment Stimulus:

The most significant pro-growth elements of the OBBBA are structural changes to the business tax code:

• Permanence for TCJA Provisions: The law makes permanent several key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) that were set to expire, including the lower individual income tax rates.⁴⁷

• Pro-Investment Expensing: Critically, the OBBBA permanently restores 100% bonus depreciation for qualified investments ⁵⁵ and permanent expensing for domestic research and development (R&D).⁵⁴ The Tax Foundation identifies these expensing provisions as having the most “bang for the buck” for economic growth, as they eliminate a tax penalty on capital investment and provide the certainty needed to boost long-run investment.⁵⁴

Individual and Populist Tax Cuts:

The bill also includes several new, high-visibility tax cuts aimed at the administration’s political base:

• “No Tax on Tips” and “No Tax on Overtime,” which are implemented as new tax credits.⁴⁹

• A new, temporary deduction for seniors (age 65 and older) of up to $6,000, which phases out at higher incomes.⁴⁸

• A new, temporary deduction for interest paid on car loans (up to $10,000) for personal-use vehicles, also subject to income phase-outs.⁴⁸

Positive Economic Projections:

Supporters of the bill project significant macroeconomic benefits. The Tax Foundation’s General Equilibrium Model estimates the OBBBA will increase long-run GDP by 1.2%.47 Pro-administration sources, such as Rep. Randy Feenstra, cite White House Council of Economic Advisers estimates of a short-run GDP boost of over 5% and the creation of 4 million jobs in the long run.58 More moderate analyses, such as from Ameriprise Financial, concur that the law “should offer a modest boost to growth” in the intermediate term, particularly in 2026.56

The political architecture of the bill is notable. It successfully merges the priorities of traditional “establishment” Republican supply-side economics (permanent expensing, lower corporate rates) with new “populist” nationalist policies (targeted cuts for tips/overtime, paid for by repealing “Green New Deal” subsidies ⁵⁹ and cutting social programs ⁶⁰). While the pro-investment elements provide a clear positive effect by stabilizing business investment expectations ⁵⁴, other analysts view the populist elements as “political carveouts” that “further complicate the tax code”.⁵⁷

Negative Effects: The Long-Term Fiscal and Distributional Drag

The positive short-term stimulus from the OBBBA is modeled to come at an exceptionally high long-term cost, representing a significant negative effect on the nation’s fiscal health and long-term economic trajectory.

Massive Deficit Impact:

The OBBBA is, fundamentally, a massive, unfunded tax cut. The administration’s claim that it would be paid for by tariffs 4 has been analyzed as insufficient and economically damaging in its own right (see Section III).

• The Congressional Budget Office (CBO), as analyzed by the Committee for a Responsible Federal Budget (CRFB), estimates the OBBBA will increase borrowing by $4.1 trillion through 2034.⁵³

• The Tax Policy Center (TPC) projects a nearly identical $4.2 trillion increase in federal debt by 2034.⁵²

• The Tax Foundation projects a conventional revenue reduction of $5.0 trillion over the decade.⁴⁷

Long-Term “Crowding Out” and Slower Growth:

Multiple independent economic models show the short-term gains are reversed over time as the massive increase in public debt “crowds out” private investment.

• The Yale Budget Lab, in a detailed analysis of the enacted bill, projects that “in the long run, real GDP growth slows because of the debt load”.⁵¹ The mechanism is straightforward: massive government borrowing “drives up interest rates” and “results in crowding out” of the private investment the bill’s expensing provisions were designed to encourage.⁵¹

• This “crowding out” effect means the positive GDP boost is “short-lived”.⁵¹ The Yale model projects an average 0.2 percentage point boost to GDP from 2025-2027, but this gain is erased as the Federal Reserve is expected to raise interest rates to combat the bill’s inflationary impulse and as the national debt accumulates.⁵¹

• The long-term fiscal picture is projected to be dire. The TPC model shows the debt-to-GDP ratio climbing to 126% by 2034.⁵² The Yale Budget Lab’s long-run forecast, accounting for macroeconomic effects, projects the debt-to-GDP ratio will reach 194 percent in 2054.⁵¹

Regressive Distributional Effects:

The benefits of the OBBBA are heavily skewed toward high-income households, while its offsets—spending cuts—disproportionately harm low-income households.

• The Tax Policy Center notes the bill “disproportionately benefits high-income households, who tend to save rather than spend extra income,” which tempers the short-term economic boost.⁵²

• The bill’s “offsets” include “remaking the nation’s fiscal, social and defense priorities” ⁶⁰ by cutting social programs. This includes expanded work requirements for the Supplemental Nutrition Assistance Program (SNAP) ⁶⁰ and, most significantly, $840 billion in cuts to Medicaid.⁶¹ The CBO estimates these Medicaid changes alone will increase the number of uninsured Americans by 7.8 million.⁶¹

Perhaps the most stark analysis comes from the Yale Budget Lab, which performed a combined distributional analysis of the OBBBA and the administration’s 2025 tariffs.⁶² The finding is a profound negative for the administration’s “affordability” agenda: “For all income groups except the top decile, the combination... will reduce after-tax-and-transfer incomes on average.” The bottom 10% of households are projected to see an average income reduction of 7% ($2,700), while the top 10% see an average increase of 1.5% (nearly $8,000).⁶²

The Global Tariff Offensive: Revenue Windfall or Economic Drag?

The administration’s most disruptive and economically significant policy has been the unilateral imposition of a global tariff regime, executed under its “America First Trade Policy”.³ This policy has positive and negative effects that are in sharp, direct conflict.

The Policy: Bypassing Congress via Emergency Powers

On April 9, 2025, President Trump declared a national emergency to “increase our competitive edge”.⁶³ This action, effective April 9, imposed a 10% baseline tariff on goods from all countries, supplemented by “individualized reciprocal higher tariffs” on countries with which the U.S. has large trade deficits.⁶³

This policy was not legislated by Congress, which holds the constitutional authority to set tariffs.⁶⁴ Instead, the administration invoked the International Emergency Economic Powers Act (IEEPA) ⁶⁴, arguing that trade deficits and foreign competition constitute an “unusual and extraordinary threat”.⁶⁶

This move was immediately recognized by markets as a radical policy shift, not a “negotiating tactic”.⁴ The Dow Jones Industrial Average plunged by almost 700 points on March 4, as the “realization that the tariff talk...is starting to sink in”.⁴

To manage this new trade regime, the administration announced its intention to create an “External Revenue Service” (ERS) to “collect all tariffs, duties and revenues” ⁶, with the president stating this “external” revenue would “take care of the internal to a large extent” and allow taxes to be lowered.⁹

Positive Effects: Revenue Generation and A “Win” with China

The administration’s tariff policy has produced two significant positive outcomes that align with its stated goals.

1. Massive Revenue Generation:

The primary stated goal of the tariffs was to raise revenue to pay for tax cuts.4 In this, the policy has been an unambiguous success.

• The CBO projected in August 2025 that the tariffs implemented since January would reduce the primary deficit by $3.3 trillion (and $4.0 trillion including interest savings) over the 2025-2035 period.⁶⁸

• The Tax Foundation projects the tariffs will raise $2.4 trillion in revenue over the decade on a conventional basis.⁶⁵

• The Yale Budget Lab projected a similar $3.1 trillion in revenue (including retaliation).⁶⁹

• The America First Policy Institute celebrated this, noting that over $195 billion in tariffs had been collected in fiscal year 2025 alone, a 150% increase from the previous year.⁷⁰

2. Forcing Concessions: The November 2025 U.S.-China Deal:

The administration’s “tariff-as-leverage” strategy, which had led to escalating tensions with China—including Chinese export controls on rare earths announced on October 9 71—yielded its first major, positive diplomatic outcome in early November 2025. Following a meeting between Presidents Trump and Xi, a “tactical truce” was reached.71

This deal represents a clear win for key U.S. economic sectors:

• China’s Concessions (U.S. Wins): China agreed to suspend its new global export controls on rare earths and related critical minerals (like gallium and germanium).⁷² This is a critical victory for U.S. technology and defense supply chains. China also committed to purchasing U.S. agricultural exports, including soybeans ⁷⁷, and to take “significant measures to end the flow of fentanyl” precursors.⁷²

• U.S. Concessions (China Wins): In return, the U.S. agreed to lower its “fentanyl tariffs” on Chinese imports from 20% to 10% ⁷⁴ and suspend the implementation of other responsive actions (like those related to shipbuilding) for one year.⁷²

This agreement is a significant positive development. It provides immediate, tangible relief to U.S. farmers ⁷⁸ and manufacturers who were being damaged by the trade war, and it represents a pragmatic de-escalation from a crisis that the administration itself had initiated.

3. Sector-Specific Manufacturing Gains:

While most models show an overall economic drag, the Yale Budget Lab model does indicate that the tariffs are projected to achieve a core administration goal: U.S. manufacturing output is projected to expand by 3.2% in the long run as production is re-shored.79

Negative Effects: A Massive Tax on the U.S. Economy

Despite the positive revenue and trade-leverage outcomes, a broad consensus of non-partisan economic models shows the tariff policy is a significant negative for the U.S. economy, functioning as a massive, contractionary tax increase.

GDP and Wage Contraction:

The tariffs are projected to shrink the U.S. economy.

• Penn Wharton Budget Model (PWBM): This model projects the most severe outcome, estimating the tariffs would reduce GDP by 8% and wages by 7% over the long term. This represents a $58,000 lifetime loss for a middle-income household and is twice as large a negative impact as a revenue-equivalent corporate tax increase.⁸⁰

• Yale Budget Lab: This model projects a -0.9 percentage point hit to GDP in 2025 alone and finds the U.S. economy will be persistently 0.6% smaller in the long run.⁶⁹

• Tax Foundation: This model projects a 0.6% long-run reduction in GDP and the loss of 657,000 full-time equivalent jobs.⁶⁵

Direct Consumer Costs and Inflation:

The core negative effect, which directly contradicts the administration’s “affordability” goal, is inflation. Economists broadly reject the administration’s premise that tariffs are “paid by foreign sources”.6 They are taxes paid by U.S. importers 81, who then pass the cost to U.S. consumers.6

• Cost per Household: Estimates of the direct tax increase per U.S. household range from $1,200 per year ⁶⁵ to $3,800 per year.⁶⁹

• Inflationary Impact: J.P. Morgan estimates the tariffs would boost Personal Consumption Expenditures (PCE) prices by 1.0-1.5%.¹¹ The St. Louis Federal Reserve, in an October 2025 analysis, calculated that tariffs account for 0.4 to 0.5 percentage points of recent annualized core PCE inflation.¹² This policy is, therefore, a primary cause of the persistent inflation the administration has pledged to “defeat”.¹⁷

Sector-Specific Devastation:

While manufacturing output may rise, this comes at the expense of other key sectors.

• Agriculture: The Peterson Institute for International Economics (PIIE) models showed agricultural production being 7 percent lower by 2026 due to tariffs and retaliation.⁸² This negative pressure highlights why the November China deal, which reopened agricultural purchases ⁷⁸, was a political and economic necessity.

• Construction: The Yale model shows that as resources are diverted, construction output contracts by 4.0% in the long run.⁷⁹

Supply Chains: The policy has caused chaos for U.S. businesses. It threatens to break the fragile supply chain for generic drugs, which operate on thin margins and cannot absorb high tariffs.⁸³ It has also created a rolling list of “derivative tariffs,” where goods like bicycles or baking trays are hit with extra steel tariffs, forcing manufacturers to either absorb the cost or pass it on to consumers.⁸⁴

The “External Revenue Service” and Legal Risk:

The administration’s proposed “External Revenue Service” (ERS) has been widely dismissed by experts as a “silly rebranding” 81 and “deeply impractical”.9 It is not a serious economic proposal but a political messaging tool. Its purpose is to reinforce the (economically false) narrative that tariff revenue is “external”.10 It creates bureaucratic redundancy, as U.S. Customs and Border Protection (CBP) already collects all tariffs.9 The administration’s feasibility study, ordered in January 91, is an exercise in political branding, not economic efficiency.

Finally, the entire tariff policy—and thus the fiscal model for paying for the OBBBA—rests on a precarious legal foundation. The administration’s use of IEEPA, a 1970s law for national emergencies, to impose trillions of dollars in taxes (tariffs) is a profound challenge to Article I of the Constitution, which grants Congress the power to tax.⁶⁴ Lower courts, including the U.S. Court of Appeals for the Federal Circuit, have already ruled against the administration, finding the IEEPA does not grant this “unbounded authority”.⁶⁴ The Supreme Court is scheduled to hear arguments in the consolidated cases on November 5, 2025.⁶⁶ If the Court rules against the administration, its entire economic model collapses. This would not only halt future tariff revenue but could require the U.S. government to reimburse the hundreds of billions already collected.⁷⁰ This represents the single greatest negative risk to the U.S. economy and fiscal picture.

The Deregulatory Push: “Animal Spirits” vs. Institutional Remaking

The third pillar of the administration’s economic strategy is a “pro-growth” agenda of sweeping deregulation, intended to “release the ‘animal spirits’” ²⁶ by removing perceived burdens on domestic industry. This policy has clear positive effects for targeted sectors but is coupled with negative effects from contradictory labor policies and a systemic assault on institutional integrity.

Positive Effects: Unleashing Domestic Production

The administration has moved aggressively through executive action to roll back regulations. The White House Council of Economic Advisers (CEA) has championed this as a primary tool for growth and inflation reduction.⁹⁷

• Key Deregulatory Actions:

1. Energy: The “Unleashing American Energy” Executive Order ⁷ is the centerpiece. It immediately began the rescission of the “social cost of carbon” calculation ⁷, ended the previous administration’s electric vehicle (EV) mandate ¹⁰⁰, and aimed to maximize oil and gas drilling.⁵ Other EOs ended “market distorting subsidies” for green energy.¹⁰¹

2. Regulatory Budget: An executive order on January 31, 2025, mandated that “for every 1 new regulation, 10 old regulations must be eliminated”.⁹⁹

3. Technology: The administration has sought to promote U.S. leadership in key technologies by issuing executive orders to accelerate federal permitting for AI data centers ¹⁰³ and promote the commercialization of U.S. drone technology.¹⁰¹

4. Government Efficiency: The administration established the “Department of Government Efficiency” (DOGE), led by Elon Musk, to “streamline the federal government” and cut spending.²

• Stated Economic Benefits (Positive):
  The White House CEA released a report 97 projecting massive positive effects from this agenda:

• Cost Savings: $907 billion in potential savings (over $10,600 per family) from rescinding environmental (EPA) and fuel economy (CAFE) standards.⁹⁷

• GDP Growth: A 0.29% to 0.78% boost in annual economic growth over 20 years.⁹⁷

• Deficit Reduction: $1.1 to $2.9 trillion in deficit reduction over 10 years, generated by this additional economic growth.⁹⁷

• Lower Inflation: The CEA report claims a 10-year moratorium on new regulations would reduce the inflation rate by 0.60% annually.⁹⁷

Negative Effects: Contradictory Policies and Institutional Erosion

The administration’s “pro-growth” deregulation agenda is undermined by two significant negative factors: a contradictory policy on labor supply and a systemic erosion of the institutions that create economic certainty.

1. Contradictory Labor Policy:

The “deregulatory” push for business coexists with a highly regulatory and restrictive push against the labor market. The administration’s “hostility to legal immigration” 105—such as overturning policies that protected children of long-term workers 105—and its aggressive policies of “forced deportation and voluntary self-deportation” 24 are negative economic policies.

This is not just a critique from opponents; the administration’s own Treasury Department acknowledged in its November 3 economic statement that these deportation policies have “reduced labor supply”.²⁴ This restricts a key factor of production, acting as a direct drag on GDP and a potential source of wage inflation, thereby contradicting the administration’s primary “affordability” goal.

2. Institutional Erosion and Systemic Uncertainty:

A deeper negative effect stems from the administration’s efforts to remake the government, an agenda associated with The Heritage Foundation’s “Project 2025”.107 While the president has distanced himself from the project 108, his actions align with its goals of dismantling or capturing independent agencies, which creates profound economic uncertainty.

• Erosion of Trust in Data: The president has publicly attacked and fired the Bureau of Labor Statistics (BLS) commissioner after a “dismal employment report”.¹¹¹ This action, coupled with public attacks on BLS data methodologies by admin-allied economists ¹¹², is an assault on the perceived integrity of U.S. economic data. This is negative for all market participants, who depend on reliable, apolitical data.

• Erosion of Fed Independence: In a similar move, the president has publicly attacked and fired a member of the Federal Reserve Board of Governors, Lisa Cook.¹¹⁴ This challenges the monetary policy independence that underpins long-term price stability and is a significant negative for economic certainty.¹¹⁴

• DOGE Savings Disputed: The positive claims of the Department of Government Efficiency are also in question. While Elon Musk claimed DOGE had saved over $160 billion by April 2025, these savings were reportedly “offset by much of its savings” from the cost of the mass layoffs of federal workers and other methods, suggesting the net positive fiscal benefit is questionable.²

The true economic impact of the deregulation agenda is therefore not the speculative, line-item savings projected by the White House.⁹⁷ The real impact is the systemic uncertainty it creates. When markets cannot trust the government’s official economic data (BLS) or the independence of its central bank (Federal Reserve), the risk premium for investing in the United States increases. This is a significant, long-term negative economic effect that offsets the positive short-term gains from cutting energy regulations.

A Self-Inflicted Wound: The 43-Day Government Shutdown

The single most damaging negative economic event of 2025 was the 43-day federal government shutdown. This crisis, which ran from early October until November 13 ³³, was not an accident but a deliberate policy choice by the administration to achieve a specific legislative goal. The shutdown itself caused billions in economic damage, but its lasting negative effect will be a healthcare “affordability crisis” in 2026.

The Cause: A Political Standoff Over ACA Subsidies

The shutdown was a political confrontation over the expiration of enhanced Affordable Care Act (ACA) premium tax credits.⁶¹ These subsidies, expanded during the pandemic and extended through 2025, were set to expire on December 31, 2025.¹¹⁸

• The Standoff: House and Senate Democrats, seeking to avoid a massive premium spike for millions of Americans, refused to pass a funding bill that did not extend these subsidies.¹¹⁷ The Republican-led administration and Congress, seeing an opportunity to dismantle a key part of the ACA, refused to include the extension.³⁴

• The Resolution: The administration won this confrontation. After 43 days of economic disruption, a handful of Senate Democrats broke ranks and voted with Republicans to pass a “clean” funding bill without the ACA extension.³³ President Trump signed the bill on November 13, ending the shutdown on his terms.³³ The enhanced ACA subsidies will not be extended.³⁴

Immediate Negative Effects: Billions in Lost GDP and Widespread Disruption

This political “win” came at a severe and quantifiable negative economic cost.

• Permanent GDP Loss: The CBO estimates the 43-day shutdown caused between $7 billion and $14 billion in permanent, unrecoverable economic losses.¹²⁸ The National League of Cities cited an $18 billion hit to Q4 GDP alone.¹³⁰

• Hit to Q4 2025 Growth: Economists project the shutdown will shave 1.5 to 2.0 percentage points off Q4 2025 GDP growth.³⁷ This will be followed by an artificial rebound in Q1 2026 as federal back-pay is processed, further muddying the already-compromised economic data.⁴⁰

• Human and Business Impact: The “real world” negative effects were immediate and widespread:

• Federal Workers: At least 670,000 federal employees were furloughed ¹²⁸, withholding over $10 billion in wages and benefits from the economy.¹³⁵

• Food Aid: Access to SNAP benefits for 42 million recipients was threatened and disrupted, leading to long lines at food banks.³³

• Small Businesses: An estimated 4,800 small businesses were blocked from receiving $2.5 billion in federally backed loans.¹³⁰

• Travel Industry: Widespread flight disruptions and cancellations, as FAA staff were furloughed, cost the travel industry an estimated $2.6 billion.³⁶

Lasting Negative Effects: The 2026 Healthcare “Affordability” Crisis

The most significant negative economic effect of the shutdown is the policy it enabled: the expiration of the enhanced ACA subsidies. This has created a clear and present “affordability crisis” for 2026, which directly contradicts the president’s primary domestic promise to “make America affordable again”.⁴

• Massive Premium Hikes: As the shutdown ended in November, millions of Americans were receiving their 2026 health insurance premium notices.¹²⁰

• On average, premiums for the 22 million subsidized enrollees ¹²³ are projected to more than double—a 114% increase on average.¹³⁹

• Individuals will see their required annual payments rise by over $1,000.¹³⁹ In many cases, families will see increases of $1,000 to $2,000 per month.¹³⁷

• The “subsidy cliff” has returned, meaning middle-class households (e.g., earning over 400% of the federal poverty level) who were previously protected will now lose all subsidies. For older Americans in this group, premiums could consume 50% or more of their income.¹²⁶

• Increase in Uninsured and Sector Damage:
  The positive effect for the administration is federal budget savings—the CBO estimates extending the subsidies would have cost $350 billion over 10 years.118 But this is a negative cost transfer to the private sector and individuals.

• The Urban Institute and the Commonwealth Fund project 4.8 million people will become uninsured in 2026 as a direct result.¹⁴³ An additional 7.3 million will lose their subsidized coverage.¹⁴⁴

• This will have a severe negative impact on the healthcare sector. Projections for 2026 include $32.1 billion in lost revenue for healthcare providers and a $7.7 billion spike in uncompensated care.¹⁴⁴

• This loss of revenue and demand is projected to result in 340,000 jobs lost across the U.S. in 2026.¹⁴³

This entire episode is the clearest demonstration of the administration’s “prowess.” It shows a willingness to absorb billions in immediate, guaranteed negative economic damage (the shutdown costs) ¹²⁸ to secure a long-term political victory (ending a key pillar of the ACA).¹¹⁷ The resulting economic outcome is a massive, negative “affordability” shock for millions of Americans, which directly and visibly undermines its own stated economic goals.⁴ This reveals that the administration’s ideological and political goals supersede its macroeconomic management goals.

Concluding Judgment: Assessing the Economic Prowess of the Administration

In its first ten months, the second Trump administration has pursued its economic agenda with a singular focus and executive force. It has successfully implemented the core tenets of its “America First” platform: it passed a massive tax bill, unilaterally imposed a global tariff regime, and began a sweeping rollback of energy and environmental regulations.

An assessment of its “economic prowess,” however, must distinguish between political effectiveness and economic coherence. The administration has demonstrated considerable prowess in the former, while exhibiting a profound disregard for the latter.

Summary of Positive Effects

The administration’s policies have produced clear, positive outcomes for its political coalition and in specific, targeted areas:

1. Legislative Efficacy: The administration demonstrated significant political skill in passing the “One Big Beautiful Bill Act”.⁴⁷ This act achieved a core positive goal for its business constituency: providing fiscal certainty for capital investment by making 100% bonus depreciation and R&D expensing permanent.⁵⁴ It also delivered on its populist promises with new, targeted tax cuts.⁴⁹

2. Regulatory Action: The administration acted decisively to implement its “pro-growth” deregulatory agenda, particularly the “Unleashing American Energy” executive order.⁷ This is a clear positive for the fossil fuel industry and aligns with its “animal spirits” growth model.²⁶

3. Trade Leverage: The negative policy of aggressive tariffs was successfully used as leverage to force a positive and pragmatic “truce” with China in November 2025. Securing the suspension of Chinese rare earth export controls and reopening agricultural markets was a tangible victory.⁷²

4. Revenue Generation: The tariff policy, while economically contested, has been an undeniable positive success relative to its stated goal of generating massive new federal revenue, with the CBO projecting $3.3 trillion in primary deficit reduction over the decade.⁶

Summary of Negative Effects

The administration’s “victories” have come at a severe economic cost, creating a cascade of negative effects that are often in direct opposition to its own stated goals.

1. Internal Incoherence: The administration’s economic model is fundamentally at war with itself. The expansionary, anti-inflationary goals of the OBBBA ⁵¹ and deregulation ⁹⁷ are in direct conflict with the contractionary, inflationary tariff policy.¹¹ The administration is, in effect, flooring the economic accelerator and the brake simultaneously.

2. Contradiction of Core Goals: The administration’s prowess has failed its own primary test: “affordability”.⁴ Its two biggest policy outcomes of 2025—the global tariffs and the expiration of ACA subsidies—are both massively negative for consumer costs. The tariffs are adding $1,200 to $3,800 in annual costs for households ⁶⁵, and the ACA subsidy expiration will add $1,000 or more in annual premiums for millions.¹³⁹ The administration is facing an “affordability problem” ⁴³ that is the direct, predictable result of its own policies.

3. Extreme Fiscal Risk: The OBBBA has been a significant negative for fiscal responsibility, locking in a $4-5 trillion deficit increase ⁴⁷ that non-partisan models show will slow long-term growth by “crowding out” private investment.⁵¹

4. Embrace of Self-Inflicted Damage: The administration has demonstrated a high tolerance for inflicting negative economic damage to achieve political ends. The 43-day shutdown, which cost the economy $7-14 billion in permanent losses ¹²⁸, was a chosen tactic, not an unavoidable event.

5. Systemic Uncertainty: The negative institutional impact of challenging the constitutional separation of powers (the IEEPA tariff doctrine) ⁶⁶ and attacking the independence of the Federal Reserve and the Bureau of Labor Statistics ¹¹¹ has introduced a level of systemic risk and data uncertainty ³¹ unseen in modern U.S. economic management.

Final Judgment on “Economic Prowess”

The Trump administration, in its first ten months, has demonstrated significant political prowess and executive effectiveness. It has successfully used executive power and legislative leverage to radically remake U.S. fiscal, trade, and regulatory policy, achieving many of its stated political goals.

However, this has been achieved with a near-total lack of traditional economic prowess. The administration’s economic strategy is not a coherent model; it is a collection of contradictory, high-risk policies. The “prowess” displayed is that of a disruptor, not a steward.

The administration has succeeded in its “America First” goals of passing tax cuts, imposing tariffs, and dismantling social programs. But it has failed, by its own actions, in its “Make America Affordable” goal. The negative economic consequences—persistent inflationary pressure, higher consumer costs on goods and healthcare, massive new public debt, and profound institutional uncertainty—are the direct and predictable result of its own policy “victories.” The administration’s prowess lies in its ability to execute its agenda, not in the economic coherence or stability of that agenda.

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