President Donald Trump Claims, "Tariffs Are Making Us Much Richer," but Economists Show They Have Unintended Consequences
Key PointsThe Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have delivered well-above-average returns with Donald Trump in the White House.
President Donald Trump has been in office for six years, with both terms nonconsecutive. During this time, major stock indexes like the Dow Jones Industrial Average and the S&P 500 have delivered above-average returns. A key driver of this bull market has been the artificial intelligence infrastructure build-out, which was already underway before Trump's second term.
Trump's Tax Cuts and Jobs Act, signed in December 2017, lowered the corporate tax rate to 21% and fueled record S&P 500 share buybacks. However, Trump's tariffs and trade policy may be causing more harm than good.
Trump often praises tariffs, claiming they make America rich and have brought in trillions of dollars in revenue. But economists have a different view. The Tax Foundation's model estimates that Trump's tariffs could lead to 338,000 fewer full-time-equivalent jobs and a 0.4% decline in GDP. Additionally, a report by three New York Federal Reserve economists found that the tariffs added 2.9 percentage points to consumer prices by February 2026, while prices would have declined in their absence.
This means tariffs are directly impacting consumer costs. The tariffs are also raising domestic manufacturing costs and have been linked to lower stock performance for U.S. companies in the past.
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