“Tariff Man,” the Biggest Threat to the US Economy in 2026.
In 2025, the Trump administration’s economic policies will center around a few key pillars: increased trade tariffs, tax cuts, pressure on the Federal Reserve, and limited financial support for affected sectors.
One of the most prominent actions his administration took in 2025 was the imposition of broad tariffs on imports from Canada, Mexico, China, and other partners, bringing the average tariff to about 16–17 percent. The stated goal of these policies is to boost domestic production, reduce the trade deficit, and finance tax cuts.
The main economic criticism of Trump’s economic policies is that the high tariffs have increased the cost of imported goods for American consumers, reduced inflation below the Fed’s target, and increased the cost of living, especially for basic goods and industrial equipment. In the labor market, the unemployment rate has also reached its highest level in several years, and job creation in key sectors such as manufacturing has slowed, which has intensified the criticism.
Many economists and financial reports warn that this approach could slow economic growth and even increase the risk of a recession, as consumer demand falls and businesses face higher costs.
However, despite the optimistic statements of some economists and the US president’s extensive advertising that the US economy will flourish in 2026, many analysts and the media consider Trump himself to be the biggest threat to the economy next year.
In the same link, the American magazine “The New Yorker”, stating that optimistic experts do not consider the US president’s capacity to create more chaos, announced that Trump said in a speech from the Oval Office of the White House last week that “we are on the verge of an economic boom the likes of which the world has never seen.” This type of exaggeration is what has convinced many voters and is far from reality. His remarks also raised questions about how the economy will perform in 2026, a midterm election year.
The economic situation is currently in the Democrats’ favor, according to the analysis. Concerns about purchasing power have not subsided, and the latest weekly YouGov/Economist poll shows that Americans still see “inflation and prices” as the most important policy issue, with only a third of them satisfied with Trump’s handling of the issue.
Meanwhile, gross domestic product growth in 2025 is expected to be around 2 percent, a percentage point lower than in the final two years of former President Joe Biden’s administration, and the unemployment rate is rising. When Biden left office, it was 4 percent; it is now 4.6 percent.
Still, some economic institutions and monetary authorities, including the Federal Reserve, have become more optimistic about the performance of the U.S. economy next year. Federal Reserve Chairman Jerome Powell has said that monetary policy will remain accommodative, spending on AI will continue, and consumers will remain active.
Accordingly, underlying economic growth is expected to be maintained in 2026. The American multinational banking and financial services company Goldman Sachs has also raised its forecast for US economic growth to 2.6%, citing reduced tariff pressure, tax cuts, and easier financial conditions as reasons for this optimism.
One of the main drivers of economic growth in recent years has been the boom in AI. According to estimates, about half of the GDP growth in 2025 was due to investment in AI-related infrastructure such as data centers, chips, and power grids.
According to The New Yorker, this trend continues as we approach 2026. In addition, a possible interest rate cut and increased tax refunds resulting from the “big, beautiful bill” could boost household consumption.