How much is Donald Trump costing America’s economy? | The Economist

The American. economy has done. really quite well, both in the long run. or the medium run, but also. even since Donald Trump. took over. and that feels quite odd. given the forecasts. of problems. from tariffs. and from migration. The way we found. to resolve this paradox. was to realise that actually. the American economy. was really set up. for an. extraordinary year. in 2025. There was a strong baseline. going in. and a number of boosts, even ahead of that, that were much stronger. than expected coming through. and those are the. first of those. blue bars that we. have up on the chart there. So starting. from the baseline,

which we pull out of. pre-Trump forecasts, we then see that actually. there’s a big boost. from tax cuts, so there's more of. that yet in 2026, but in 2025. there's already some. A boost. from stockmarkets. doing very well, which is partly fuelled. by optimism. about Trump to a degree, but really. mostly fuelled. by the extraordinary. advances in AI. and then, even beyond that, a specific kind of. data-centre boom. that we label. AI capital expenditure. that you can see. in the numbers too. And so, off that baseline. we reckon, were it not for the MAGA tax,

were it not for. everything we’re going. to get to, America was set up. to be. homing in on. almost 3% GDP growth. and instead. what happened. in 2025 was a lot. closer to 2%. So the gap between the two. is about three-quarters. of a percentage point. Yes. Let's just... just to keep it simple, the American economy. would have grown, you think, about three-quarters. of a percentage point faster. to tell us about very briefly. Indeed, and so that’s one. way of doing it. The other way is. just to look straight. at what did Donald Trump do. and how damaging was it? And this is pulling together. external estimates, our own. crunching of the numbers. and so on. We really pulled out three.

that we thought mattered. The first was tariffs, we talked. about those to death. Those have, we reckon, genuinely contracted. the economy. We've used an estimate there. of 0.2. percentage points-ish. but something. pretty material. Just as important. if not more than the tariffs, we reckon, was. the immigration drag, that border shutdown, mass deportations, talented people. not coming in, all of that. Then finally, in our calculations. actually, the largest of. that was the uncertainty. So the sheer churn, the sheer chaos and. if you look at. American business investment. outside of the AI sector, which has done.

really well, it’s actually in a slump. It's actually a slump. even worse. than what Britain. suffered after Brexit, which was another. similar shock to uncertainty. So you add all that up. and you get to. a similar figure of, again, three-quarters of a percentage point. give or take, but a pretty hefty MAGA tax.