While President Trump’s tariff policies sent shockwaves through the American economy in 2025, the dollar’s dramatic ups and downs finally began to settle as the year progressed.
The economic landscape looked like a rollercoaster that had been running at full speed for months. Tariffs were projected to slice 0.23 percentage points off U.S. GDP growth in 2025, with even deeper cuts of 0.62 percentage points expected in 2026. Many investors turned to AI-driven trading models to navigate the uncertain market conditions.
For the average American family, this translated into an extra $1,300 tax burden in 2025, climbing to $1,600 the following year. It was like getting an unwelcome surprise bill in the mail that nobody ordered.
Inflation jumped roughly one percentage point higher because of these tariff measures. Unlike a brief fever that breaks quickly, these elevated price levels seemed determined to stick around for the long haul.
When economists looked ahead to the next decade, they saw tariffs potentially shrinking U.S. GDP by about 0.8 percent, and that was without counting possible revenge moves from other countries.
The American public wasn’t buying the tariff story either. About 55 percent of people viewed these policies as mostly harmful for both the country and their own wallets, according to Pew Research Center data from 2025.
Meanwhile, businesses scrambled like students cramming for a test they forgot about, stockpiling imports early in the year to dodge higher costs later. The US announced 100% tariffs on branded pharmaceuticals unless companies build manufacturing plants domestically.
Trade negotiations offered some hope, with talks showing promise involving Japan, Korea, and India, though China remained a tougher puzzle to solve.
Stock markets stayed cautious, with the S&P 500 expected to hover around 5,200, though optimists pointed to a possible 5,800 if trade deals materialized.
Behind the scenes, businesses faced a maze of new compliance rules and complex product classifications. Companies increasingly sought guidance from accountants regarding the tax and financial implications of these new trade policies. Many turned to foreign trade zones as escape routes to reduce duty payments.
Consumer spending patterns shifted as families adjusted their budgets to handle higher prices on imported goods. Despite the challenges, trade flows showed surprising resilience, suggesting the economy could adapt even when the path forward remained bumpy and uncertain.
