‘Liberation Day,’ One Year Later

Trump’s tariffs didn’t spur economic growth but did encourage trade between spurned U.S. partners

By Phil Gramm and Donald J. Boudreaux. Excerpts:

"our trading partners  . . . pivoted toward other trading partners"

"they have mutually lowered barriers and increased trade with each other" 

"“the world [is] . . . reglobalizing around partners who commit to rules" 

"U.S. households, denied access to the lowest-priced goods on global markets, will have less purchasing power"

"tariffs will also make American goods less competitive globally and more expensive at home" and 

"raise the prices of inputs used by U.S.-based producers"

"more than half of U.S. imports are inputs used in producing goods and services in America"

[Tariffs] "divert capital and labor away from uses that would have yielded higher returns to capital and higher wages for workers" 

"in 2025 the three major U.S. stock indexes underperformed"

"2025’s 1.2% increase in inbound foreign direct investment was considerably less than the 2.7% increase in 2024 and the 7.6% increase in 2017, the first year of Mr. Trump’s first presidency"

"Real gross private domestic investment last year grew by only 2% after growing in 2024 by 3% and 4.4% in 2017"

"Real U.S. gross domestic product grew by only 2.1% in 2025, compared with 2.8% in 2024 and 2.5% in 2017"

"job growth in 2025, at 0.5%, was slower than job growth of 1.2% in 2024 and 1.6% in 2017"

"in 2025 the pace of losing manufacturing jobs accelerated to 1.2%, faster than the decline in 2024 of 0.7%. In 2017 manufacturing jobs actually increased by 0.7%"