supporters as strong leadership,
while others shocked markets, policymakers, and ordinary people alike.
Historic Tariff Escalation
One of the most headline-grabbing decisions was the dramatic increase in U.S.
tariffs on imported goods. The Trump administration raised tariff rates to their
highest levels since the Great Depression, hitting major trading partners,
including China, the European Union, Mexico, and others. These tariffs were
meant to protect American industry and reduce trade deficits, but they also
triggered uncertainty in global supply chains and unsettling market reactions.
Asharq Al-Awsat Economists warned that these tariff hikes could slow economic
growth, raise consumer prices, and provoke retaliatory measures from trading
partners — effects that were expected to spill fully into 2026.
Slower Economic Growth
Contrary to Trump’s optimistic forecasts of booming growth, several major
economic institutions lowered their expectations for the U.S. economy in 2026.
Organizations such as the OECD and the IMF projected slower GDP growth for the
U.S., partly because of ongoing trade tensions and policy uncertainty. FXStreet
+1 This slowdown surprised many investors and analysts who had anticipated a
stronger economic rebound. The lack of clear coordination on trade policy within
the administration added to the volatility.
Market Volatility and Risk
Financial markets reacted sharply to Trump’s unpredictable decisions. Stock
indexes experienced increased swings as investors reassessed risk and
uncertainty, while some companies delayed hiring or investment plans in response
to tariff instability. In particular, manufacturing and export-oriented sectors
reported slower production and hiring, as global demand became harder to
predict.
4. Trade Policy Shakeups
Trump’s “America First” trade agenda didn’t stop at tariffs. His administration
entered tough negotiations with key partners and demanded major concessions in
future trade agreements. While this approach aimed to strengthen U.S.
negotiating power, it also baffled some allies and contributed to diplomatic
strain. as-coa.org The result was a global reset in trade dynamics — with some
countries diversifying supply chains away from the U.S. and others pushing for
regional trade alliances that bypassed American influence.
Federal Reserve and Monetary Policy Influence
In late 2025 the president announced his intention to replace the Federal
Reserve chair in early 2026. This move was widely seen as politically charged
and risked undermining the Fed’s independence — a bedrock of U.S. monetary
policy. Reuters Markets closely watched the nomination process, fearing
potential pressure on interest rate decisions. A shift in the Federal Reserve’s
stance could have broad implications for inflation, borrowing costs, and
investment flows throughout 2026.
Drug Price Agreements — A Surprising Turn
In a different economic front, the Trump administration secured deals with
several major pharmaceutical companies to lower drug prices in the U.S. while
rolling out a new TrumpRx platform. This initiative was framed as a way to
reduce healthcare costs for consumers and counter long-standing pricing issues.
AP News Although not as headline-grabbing as the trade actions, this decision
reflected Trump’s willingness to disrupt established markets and bring private
industry into new price frameworks. What All This Means The economic decisions
of 2026 under President Trump were nothing if not shocking and unpredictable.
They reflected a mix of aggressive trade protectionism, political influence on
monetary policy, and unconventional market interventions. Supporters argue that
these moves are necessary to rebalance trade and put American interests first.
Critics warn that the uncertainty they create could slow economic growth and
unsettle markets both at home and abroad. Whether you view these decisions as
bold leadership or reckless disruption, one thing is clear: 2026 will go down as
one of the most consequential years for U.S. economic policy in recent memory.
The New Yorker
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