President Trump knows something he doesn’t want to admit publicly — the economy is weakening, largely because of his own policies.
What to do? Trump obviously loves tariffs, because slapping taxes on imports gives him leverage over countries, companies, and CEOs. Trump can sway foreign economies, US corporate profits, and even voter well-being by dialing tariffs up or down, a form of power he must find thrilling.
But Trump’s import taxes are bound to take a toll on the US economy because they raise costs, destroy efficiencies, and add uncertainty. When you raise the cost of doing business in a free-market economy, you simply get less economic activity.
That data is now starting to show that, just as hundreds of economists have forecast. Hiring has slowed sharply, probably because CEOs are suddenly more cautious about whether sales and profit margins will hold up. Some companies are already suffering and others are likely to join them.
Read more: What Trump’s tariffs mean for the economy and your wallet
Wholesale prices surged in the latest monthly data, exactly what you’d expect given that tariffs are a consumption tax that directly raises the cost of imported goods. There are signs that tariff-related price hikes are hitting consumers too, which also makes sense because wholesalers try to pass on as much of the added cost as they can. “Businesses, for now, are bearing the tariff brunt,” David Rosenberg of Rosenberg Research wrote in an Aug. 14 analysis. The cost impact is spreading across the supply chain.
Goods shipments to the United States are plunging, which suggests there will be future shortages and even higher prices. Consumers are likely to start noticing in the back-to-school shopping season and when they do holiday shopping toward the end of the year.
Trump and his supporters argue that the tariffs haven’t had any of the dire effects critics have predicted, such as a recession or a stockmarket wipeout. But that defense is premature. The timing of the tariff impacts is hard to predict because much depends on how thousands of individual companies react to higher costs. But a slowing economy is virtually certain, as volumes of research into tariff effects show.
This, Trump knows. While surrounded by many preening sycophants, Trump’s advisers also include econoliterates such as Treasury Secretary Scott Bessent and White House economist Kevin Hassett. Sure, a big part of their job is to tout Trump’s policies, no matter what. But it’s also their job to prep Trump for bad news and help him get ahead of it.
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Trump is doing that now, laying the groundwork for a propaganda blitz that he hopes will offset some bad economic news that’s likely to get worse. On Aug. 1, he fired the top economist overseeing the monthly jobs report, falsely claiming that the weak numbers for July were “rigged.” On Aug. 12, Trump said investing titan Goldman Sachs should “get … a new economist” after the firm published a report forecasting that consumers would bear 67% of the cost of Trump’s tariffs.
Trump has repeatedly lambasted Federal Reserve Chair Jerome Powell (who’s a banker, not an economist) for refusing to cut interest rates. Many economists think the Fed is right to stand pat, given that Trump’s tariffs are stoking inflation and lower rates would make inflation worse.
Trump is seeking some friendlier economists who might be inclined to tilt the data in Trump’s favor. He nominated conservative economist EJ Antoni to run the agency overseeing the jobs and inflation reports, a move widely booed by the economic establishment. Trump appointed White House economist Stephen Miran to a temporary opening on the Fed’s rate-setting committee, and next year Trump will be able to appoint a new Fed chair as Powell finishes out his term.
Read more: How jobs, inflation, and the Fed are all related
The battle lines forming will pit most mainstream economists against the alternative narrative Trump’s own forecasters are likely to weave. Trump will never attain critical mass. Most economic forecasts and analyses are within decimal points of each other, and sometimes the only big variation is timing. While Goldman Sachs thinks consumers will bear most of the cost of Trump’s tariffs, for example, so do researchers at just about every other investing firm, forecasting outfit, and think tank.
There’s no political cost to Trump’s war on economists, who aren’t exactly populist heroes toiling in the trenches with the common man. But ordinary people don’t need economists to tell them if the economy is good or bad, if it’s a boom or a recession. They feel it in their own lives based on how much their paycheck can buy, opportunities to get ahead, and what they see happening to other people in their communities. Trump might be able to fudge some data, but he can’t convince struggling people they’re better off than they are.
A year or two into Trump’s presidency, the impact of tariffs and other policies will no longer be mysterious. We’ll know how damaging they are through grocery store prices, rising or falling unemployment, and the value of 401(k) plans. What economists say might not matter, but what they’re telling us now is that more pain is coming.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
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