How Is Trump Handling the Economy?

On July 3, Congress passed President Donald Trump’s requested “one big, beautiful bill.” It adds $3.3 trillion to the national debt over the next decade, largely due to roughly $4.5 trillion in tax cuts. To offset costs, the budget bill makes deep cuts to social programs like Medicaid and food assistance.

On May 30, Trump announced that he would double the tariff on imported steel and aluminum to 50%. Trump set the initial 25% levy in March.

The president made the initial announcement at a US Steel plant in Pennsylvania, telling workers there that the move is intended to “further secure the steel industry in the United States.” In a later social media post, he said the new rate would go into effect on June 4.

The United States imports more steel than any other nation — 26.2 million metric tons in 2024, from 79 different countries and territories.

On May 29, a federal appeals court approved a request by the Trump administration to pause a court ruling that would block most of Trump’s tariffs. The appeals court ruling reinstates Trump’s tariffs, at least temporarily.

On May 28, a federal trade court said that Trump does not have the legal authority to implement most of his tariffs including his sweeping “Liberation Day” tariffs, as well as broad tariffs on Mexico and Canada. Most tariffs on China would also be illegal, under the ruling.

On May 12, President Donald Trump issued an executive order promising to lower drug prices, but he offered no details on how it would work or how effective it might be.

Trump said he would order drug companies to reduce prices for all pharmaceuticals to “most-favored nation” levels — the lowest amount a pharmaceutical company charges any other wealthy, developed country. He also said his administration would “end global freeloading” and would take aggressive actions against drug manufacturers that don’t comply. He gave drug makers 30 days to negotiate lower prices.

On March 27, the Trump administration announced that 10,000 workers in the Health and Human Services Department (HHS) would be laid off. Another 10,000 employees have opted for buyouts and early retirements, which brings the total job cuts to 20,000 — about one-quarter of the department’s 82,000 person workforce.

The plan, under the leadership of Health Secretary Robert F. Kennedy Jr., is to restructure the department by consolidating 28 divisions into 15, including the creation of a new division called the Administration for a Healthy America (AHA).

“I want to promise you now, we’re going to do more with less,” Kennedy said in a video posted on YouTube. He added, “The entire federal workforce is downsizing now, so this will be a painful period for HHS.”

The Health and Human Services Department is responsible for protecting public health and administering more than 100 programs. That includes programs that service children, families, seniors, people with disabilities and underserved communities. HHS is also charged with managing Medicaid and Medicare; administering drug and food safety; leading efforts in disease prevention and other medical research; responding to public health emergencies; and providing mental health and substance abuse support programs.

On March 20, Trump issued an executive order to shutter the Department of Education (ED). The order shifts many responsibilities of the department onto states and other federal agencies.

Trump has long vowed to get rid of the ED but cannot fully do so without an act of Congress.

Certain functions of the ED are guaranteed under the law including, as the release mentions, formula funding; federal student loans and Pell grants; funding for special needs students; as well as competitive grantmaking. The order says all statutory functions will continue to be carried out by the federal government.

On March 28, Trump said from the Oval Office that the ED’s $1.6 trillion student loan portfolio would be transferred to the Small Business Administration. He added that oversight of special education services and nutrition programs would be transferred to the Health and Human Services Department.

» MORE: Trump and student loans: What could happen and how borrowers can prepare

Secretary of Education Linda McMahon said in a press release, “We’re going to follow the law and eliminate the bureaucracy responsibly by working through Congress to ensure a lawful and orderly transition.”

McMahon also said, “Teachers will be unshackled from burdensome regulations and paperwork, empowering them to get back to teaching basic subjects. Taxpayers will no longer be burdened with tens of billions of dollars of waste on progressive social experiments and obsolete programs. K-12 and college students will be relieved of the drudgery caused by administrative burdens—and positioned to achieve success in a future career they love.”

» MORE: Trump orders the closure of the Department of Education: Now what?

President Donald Trump stoked recession fears following a Fox News interview that aired on Sunday when he didn’t deny the possibility of a recession. He told Fox News, “I hate to predict things like that. There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing. And there are always periods of, it takes a little time. It takes a little time, but I think it should be great for us.”

On March 6, Trump paused tariffs on all Mexican and Canadian imports under the 2020 free trade deal, known as the United States-Mexico-Canada Agreement. The pause will be in effect until April 2.

Trump's 25% tariffs on goods not included in the trade deal remain in effect. On Tuesday, an additional 10% tariff was also levied on Chinese goods, bringing the total added tariff to 20%.

The Trump administration is eyeing a change in how gross domestic product (GDP) is measured in the wake of federal spending cuts.

On Sunday, Commerce Secretary Howard Lutnik told Fox News that the Trump administration may split government spending from GDP. He said, “You know that governments historically have messed with GDP. They count government spending as part of GDP. So I’m going to separate those two and make it transparent.”

Similar remarks were made by Elon Musk, billionaire and leader of the so-called Department of Government Efficiency (DOGE) on Feb. 28. DOGE has recently taken action to lower government spending, which includes firing thousands of federal employees, freezing federal funding and eliminating government contracts.

It’s unclear why the administration has put the target on GDP data transparency since the Bureau of Economic Analysis (BEA) already breaks down government spending at the federal, state and local levels for each quarter. Those results are published by the BEA on a quarterly basis.

Economic data has shown some disappointing figures that include stubborn inflation levels; fewer hires; and lower consumer spending. Consumer confidence in the economy is down, as well. The latter is largely due to Trump’s recent tariff announcements, according to the Conference Board’s recent survey results.

On Feb. 10, a federal judge ruled that Trump’s team has continued freezing federal spending and grants. On Jan. 27, the Office of Management and Budget ordered a temporary pause on all federal funding, with some exceptions. Rhode Island District Court Judge John J. McConnell said that Trump’s team has not complied with a court-ordered pause to the spending freeze.

In his decision, McConnell said that the broad, sweeping funding freeze is “likely unconstitutional and has caused and continues to cause irreparable harm to a vast portion of this country.” Federal spending is approved each year by Congress.

The Trump camp told the court that it is “just trying to root out fraud.” The judge ordered Trump to resume the funding of all spending programs that were previously funded and must continue funding other agencies, specifically including the National Institute for Health (NIH). On Sunday, the NIH announced it was capping funding for indirect funding costs at 15%.

On Feb. 11, President Trump announced 25% tariffs on all steel and aluminum imports. The tariffs go into effect on March 12.

The top importers of steel to the U.S. include Canada, Mexico, Brazil, South Korea, Japan, Germany, China, Taiwan, Vietnam and Algeria, according to the International Trade Administration. Trump said that no trade partners would be exempt from the tariffs.

On Feb. 6, during a closed-door meeting with GOP House leaders, Trump reportedly laid out his tax priorities, which include:

• Extending the expiring 2017 Tax Cuts and Jobs Act. 

• Expanding the State and Local Tax (SALT) deduction. 

• Enacting tax breaks for products that are made in America.

• Enacting his “no tax on tips” plan.

• Cutting taxes on overtime pay.

• Cutting taxes on Social Security benefits.

• Nixing tax breaks for owners of sports teams. 

• Eliminating the carried interest tax deduction

The Committee for a Responsible Federal Budget (CRFB), analyzed Trump’s tax priorities and estimates it would be costly, resulting in a revenue reduction by anywhere from $5 trillion to $11.2 trillion over 10 years; and a 1.3% to 3% reduction in Gross Domestic Product (GDP). The CRFB projected that the tax priorities as proposed would boost debt to anywhere from 132% to 149% of GDP over 10 years, from an estimated 100% at the beginning of 2026, unless the costs of the priorities are otherwise offset.

Confusion over the details of a federal funding interruption continued throughout the week with seemingly no clear answer as to whether or not the pause was still in place.

But on Jan. 31, a federal judge in Rhode Island granted a temporary restraining order that blocks the pause. U.S. District Judge Jack McConnell approved the request after hearing arguments in a lawsuit filed by 22 Democratic-led states and the District of Columbia. In the decision, the judge wrote that the White House’s actions likely “violate the Constitution and statutes of the United States.” The restraining order is set to last until the court rules on the state’s motion for a preliminary injunction.

It all started with a memo issued on Jan. 27 by the Office of Management and Budget (OMB), which called for the pause of all federal spending, grants and other financial assistance programs. The OMB said the programs would be reviewed to ensure they align with President Trump’s various executive orders.

Assistance programs and activities that the memo named during the review included, “financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”

But there was little clarity on which specific programs the memo was referring to. Various reports speculated that the pause would have included Medicaid; transportation funding; small business loans; disaster relief aid; FHA mortgage insurance; as well as other funding for state, local and tribal governments. Assistance programs for individuals — Medicare, Social Security, food assistance through the SNAP program and student loans — were expected to continue without interruption.

Late on Jan. 28, after a day of uncertainty and conflicting reports on the scope of Trump's order, a federal judge in Washington D.C. granted a "brief administrative stay" to block the spending freeze pending further examination by the courts. Judge Loren AliKhan's order expired on Feb. 3, at 5 p.m. EST.

The following afternoon, the White House issued a memo rescinding the OMB order, but a later post on X from the White House Press Secretary Karoline Leavitt claimed a funding freeze was still in place. Leavitt said the purpose of the memo was “To end any confusion created by the court's injunction.”

Intention aside, Leavitt’s comments launched even more chatter about the reality of the pause.

However, Sen Chris Murphy (D-CT) confirmed on X that the funding shutdown was still in place.

Sen. Tim Kaine (D-VA) said in a video he posted on X “This thing ain’t over, we’re going to have to keep battling.”

The initial memo set a Feb. 10 deadline for agencies to submit detailed information on programs, projects or activities included in the pause. There may also be possible exceptions on a case-by-case basis, the memo notes.

The pause faces further potential legal wrinkles. The Spending Clause in the U.S. The Constitution gives Congress the power to fund all kinds of programs. Each year, Congress approves funding for grants, loans and financial assistance programs — that makes those programs legal obligations.

The Impoundment Control Act of 1974 requires the executive branch to spend funds that Congress approves of. In January 2020, the U.S. The Government Accountability Office said the OMB’s withholding of obligation funds for the Department of Defense for assistance to Ukraine violated the ICA. In the memo, the GAO wrote, “Faithful execution of the law does not permit the President to substitute his own policy priorities for those that Congress has enacted into law.”

On Jan. 27, Trump said he plans to enact tariffs on steel, aluminum, copper, pharmaceuticals, computer chips and semiconductors, in the hopes of bringing manufacturing back to the U.S.

Trump said tariffs on computer chips and semiconductors from Taiwan could be anywhere from 25% to 50% or even up to 100%. Tariffs on chips and semiconductors could lead to higher prices for computer products including smartphones.

In response, the Taiwanese government said the current business model with the U.S. is a win-win, while the Taiwan economy ministry called the two nations’ semiconductor businesses “highly complementary to each other.”

The Taiwan Semiconductor Manufacturing Co. (TSMC) — the largest producer of semiconductors in the world — is investing $65 billion in Arizona for new chip manufacturing plants, as part of the Biden administrations’ CHIPS and Science Act. The Act also gave funding to U.S. companies for the creation and expansion of chip manufacturing plants.

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