Donald Trump's first year: 5 economic forces that will define his presidency

UPDATED: Feb 1, 2025 00:07 IST

Donald Trump is back in the White House, promising economic growth, lower taxes, and booming energy production. But while unemployment remains at a low 4.1%, key economic forces could challenge his agenda.

Here’s what Americans should watch in the coming months.

Inflation still stings

Americans voted with their wallets, and inflation was the top concern for 4 in 10 voters, according to AP VoteCast. Trump now faces pressure to lower prices on essentials like groceries, gas, and housing.

But inflation is tricky. Consumer prices were rising at a 2.4% annual rate in September, compared to 2.9% in December. If Trump enacts tariffs and tax cuts, economists warn it could push prices higher.

Tariffs could drive up costs

Trump wants a 25% tariff on Mexican and Canadian imports starting February 1, plus an additional 10% on Chinese goods. He says this will curb illegal immigration and boost revenue.

But tariffs are a double-edged sword. Previous hikes doubled tariff revenue to $85.4 billion, yet studies show they also increased costs for American families.

The national debt Is climbing

Trump blames inflation on Biden’s spending, yet 22% of the current $36 trillion debt comes from Trump’s first term. High debt means high borrowing costs, impacting consumers and policymakers alike.

Interest rates on the 10-year Treasury note have risen to 4.6%, making debt management urgent.

Immigration Crackdown vs. Job Market Needs

Trump’s strict immigration stance could slow economic growth. Immigrants made up 84% of US population growth last year, adding 2.8 million workers. Without them, industries like construction and agriculture may struggle to find employees.

The Wealth Gap Keeps Growing

Trump has a tough task to figure out how to balance the interests of billionaires with those of his blue- collar voters. His inaugural events included several of the world’s wealthiest men: Tesla’s Elon Musk, Amazon’s Jeff Bezos, Meta’s Mark Zuckerberg and LVMH’s Bernard Arnault. Each is worth roughly $200 billion or more, according to the Bloomberg Billionaire’s Index.

This year, as of Friday, Bezos' net worth is up by $15 billion, Zuckerberg is up by $18 billion and Musk’s wealth has risen by $6 billion. Those are all monthly increases.

Meanwhile, according to Census Bureau data shows median U.S. household wealth rose by just $9,600 in 2021-2022, to $176,500.

(With input from AP)