America’s Economy Will Survive Trump and His Tariffs. The Biggest Loser May Be Trump Himself.

 

America’s Economy Will Survive Trump and His Tariffs. The Biggest Loser May Be Trump Himself.
By Steven Orlowski, CFP, CNPR

“By the middle of 2026, U.S. growth will be experiencing a strong recovery. But Trump will have been damaged politically.” – Nouriel Roubini

Former President Donald Trump’s protectionist trade agenda is poised to return with a vengeance if he wins the 2024 election. With pledges to reimpose steep tariffs on China, expand duties on imports across the board, and decouple key U.S. industries from global supply chains, Trump’s economic platform marks a radical departure from free-market orthodoxy.

Yet for all the noise surrounding Trump’s return to tariff-driven economics, the U.S. economy may ultimately weather the storm. The bigger question is whether Trump’s own political legacy can.

Tariffs: A Blunt Tool with Blunt Consequences

Trump’s first term saw the imposition of tariffs on hundreds of billions of dollars in imports, particularly from China. The result? Trade tensions rose, inflation ticked up, and American farmers, manufacturers, and consumers absorbed much of the pain.

Despite Trump’s claims that China “paid” the tariffs, the economic reality was less convenient. Multiple studies, including from the Federal Reserve and academic economists, found that the costs were largely passed onto U.S. importers and consumers. Businesses faced higher input prices, forcing many to raise prices or cut investment.

With Trump now proposing a 10% universal tariff on all imports and an even steeper 60% on Chinese goods, economists warn of a new inflationary jolt just as the Federal Reserve works to keep prices in check.

“Tariffs are a tax on Americans, plain and simple,” said former Treasury economist Erica York. “They distort supply chains, raise costs, and hurt long-term competitiveness.”

America’s Underlying Resilience

Still, the U.S. economy remains remarkably resilient. Unemployment is low, wages are rising, and consumer spending—though strained by past inflation—continues to support growth. Even with geopolitical disruptions and monetary tightening, most forecasts point to continued expansion.

Nouriel Roubini, the economist famously dubbed “Dr. Doom” for predicting the 2008 financial crisis, sees brighter days ahead—regardless of Trump’s trade policies. “By the middle of 2026, U.S. growth will be experiencing a strong recovery,” he said recently, suggesting that America’s economic engine will adapt and rebound even under renewed trade friction.

Roubini's assessment reflects a broader view: while Trump’s tariffs could hinder short-term growth and unsettle markets, the long-term trajectory of the U.S. economy remains intact.

Political Risk for Trump

The more immediate and lasting damage may be political—and personal. Trump’s tariff crusade may play well with parts of his base who favor “America First” rhetoric, but it carries risks with swing voters, moderates, and the business community.

Small businesses, which rely on affordable imports, are especially vulnerable. Higher prices on goods from China and other countries will ripple through supply chains, hitting both producers and consumers in middle America—precisely the demographic Trump needs to energize for an electoral comeback.

Moreover, voters are increasingly concerned about inflation, housing affordability, and interest rates. If Trump’s policies are perceived as worsening these issues, he may find himself blamed at the ballot box, regardless of broader macroeconomic trends.

“As inflation starts to cool and recovery gains momentum, voters may credit the system, not the man,” said political analyst Maria Torres. “If Trump’s policies are seen as disruptive or harmful, they could undermine his appeal in key states.”

Lessons from the Past

History offers precedent. The Smoot-Hawley Tariff Act of 1930, enacted during the Great Depression, raised duties on thousands of imports and triggered a global trade war. The result was catastrophic—a collapse in global trade and a deeper economic downturn.

Though today’s global economy is far more integrated and resilient, the underlying lesson remains: protectionism can backfire, economically and politically.

The Bottom Line

Donald Trump’s proposed tariffs may not sink the U.S. economy. American businesses are adaptive, supply chains evolve, and consumers find substitutes. But the very policies that Trump champions as economic defense mechanisms may become his political Achilles’ heel.

If Roubini is right, a strong recovery will be underway by 2026. But by then, the political costs of populist economics could be clear—and paid in full by Trump himself.