President Donald Trump doubled down this week on his defense of tariffs, crediting them for the nation’s current economic strength despite growing criticism from economists and trade experts who say his trade policies are fueling inflation and slowing growth.
Speaking at a White House roundtable on Homeland Security Task Forces, Trump said the country’s economic outlook is stronger than ever, in large part because of tariffs.
“Inflation I’ve already taken care of,” he told reporters. “Economically, the country is the strongest it’s ever been. Thank God for tariffs. If we didn’t have tariffs, we’d be a third-world nation.”
Trump framed tariffs as both an economic and national security tool, saying they help shield the U.S. from global instability. “We’re the richest nation in the world now because of tariffs,” he added, calling them a safeguard against economic dependence on foreign powers.
But outside the White House, economists paint a very different picture. They say Trump’s tariffs are putting pressure on American households, raising prices on everyday goods, and creating uncertainty for businesses that rely on imports and exports.
Economists Warn of Rising Costs
A new commentary from Yale School of Management’s Jeffrey Sonnenfeld and Stephen Henriques argues that Trump’s trade policies have made the U.S. economy weaker and more volatile.
The pair wrote in Salon that “Trump’s arbitrary and unpredictable tariffs” have disrupted markets, driven up costs, and hurt U.S. credibility abroad.
According to Sonnenfeld and Henriques, U.S. economic growth has slowed to an annualized rate of just 1.2% for the first half of 2025, following a brief rebound in the second quarter. Forecasts for the full year now hover around 1.4%, roughly half of last year’s pace.
They blamed “sporadic tariff policies” and erratic trade announcements for the turbulence, noting that Trump has often reversed or delayed planned tariff increases without clear explanation.
“The harm to America’s credibility and its relations with international partners is far more costly over the long run,” the authors wrote.
The article also noted that Trump’s tariffs on steel, aluminum, automobiles, and other materials have “disincentivized growth and investment” in the very sectors he claims to be protecting.
Major automakers such as Ford, General Motors, and Stellantis are expected to pay nearly $10 billion more in costs this year due to tariff increases that put them at a disadvantage compared with foreign competitors like Toyota and Mercedes-Benz.
“Tariffs have fundamentally disrupted markets, leaving businesses vulnerable to the double threat of uncertainty and cost inflation,” Sonnenfeld and Henriques wrote.
Inflation Hits 3%, Experts Cite Tariffs
The economic strain is becoming visible in consumer prices. A new report released this week showed inflation climbing 3% from last year — the fastest pace since January. Trade analysts told ABC News that Trump’s latest move to end trade talks with Canada could push prices even higher.
Trump announced early Friday morning that he was terminating negotiations with Canada after a television ad produced by the province of Ontario criticized his tariff policies.
“TARIFFS ARE VERY IMPORTANT TO THE NATIONAL SECURITY, AND ECONOMY, OF THE U.S.A. Based on their egregious behavior, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED,” Trump posted on his social media platform.
The ad featured audio from a 1987 speech by President Ronald Reagan warning of the long-term risks of protectionism and trade wars. Ontario Premier Doug Ford responded on X, writing, “Canada and the United States are friends, neighbours and allies. President Ronald Reagan knew that we are stronger together. God bless Canada and God bless the United States.”
Economists say ending trade discussions could have tangible effects on prices in the U.S. market. Canada is the top exporter of steel and aluminum to the United States, and both materials are central to manufacturing and home construction. With tariffs of up to 50% remaining in place, companies may pass on higher costs to consumers.
“Trade talks could’ve resulted in the lowering of existing tariffs,” said Michael Sposi, an economics professor at Southern Methodist University. “Now that they’ve been suspended, those costs stay baked in.”
Steel accounts for about 60% of a car’s weight, according to the American Iron and Steel Institute, meaning even modest increases in steel prices can have significant effects on vehicle costs. Automakers and appliance manufacturers are expected to raise prices to offset their higher input costs.
“Major home appliances — such as refrigerators, dishwashers and washing machines — rely in part on steel, making them vulnerable to elevated prices due to tariffs,” ABC News reported.
A Widening Economic Divide
Despite Trump’s insistence that tariffs strengthen the U.S. economy, many companies and households are feeling the squeeze.
Sonnenfeld and Henriques estimate that tariffs have cost the average American household about $2,400 annually, as manufacturers, retailers, and service providers pass higher production costs along to consumers.
Businesses, too, are scaling back investment plans as trade uncertainty weighs on confidence. Private business investment and consumer spending both declined this year, falling from 1.9% growth last quarter to just 1.2%.
While Trump has touted strong GDP figures and stock market rallies, economists note that much of the optimism is being fueled by artificial intelligence investments, not trade policy.
“The economy has been buoyed by the trillions of dollars invested in the AI arms race,” Sonnenfeld and Henriques wrote.
“But over time, more businesses and consumers will start to realize how much better off they would be without the tariffs.”
Trump has dismissed those concerns. During the roundtable, he said tariffs have protected American jobs and reduced the country’s dependence on foreign suppliers.
“We’re able to economically protect ourselves and really protect ourselves from a national security situation,” he said.
USMCA Review Looms
The breakdown in trade talks with Canada comes at a sensitive time, as the United States-Mexico-Canada Agreement (USMCA) is due for a joint review next year.
Economists warn that Trump’s frustrations with Ottawa could spill over into those discussions, threatening the stability of North American trade.
“The breakdown of these talks about current tariffs probably doesn’t bode well for those negotiations,” University of St. Thomas Economics Professor Tyler Schipper told ABC News.
If USMCA revisions stall, experts say additional imported products (including cars and consumer goods) could face higher prices.
The U.S. currently runs a $63 billion trade deficit with Canada, a smaller gap than with China or Mexico, but still a major factor in cross-border supply chains.
Divided Views, Uncertain Future
Trump’s supporters argue that tariffs are restoring American strength by forcing trading partners to the table and protecting key industries.
His critics counter that the approach is arbitrary and short-sighted, raising costs for families and straining alliances that have long supported U.S. prosperity.
Treasury Secretary Scott Bessent and Special Trade Representative Jamieson Greer have reportedly worked to moderate Trump’s more aggressive trade actions, but economists say the damage is already showing.
Sonnenfeld and Henriques wrote that Trump’s negotiating style “relies on beginning with a punch in the nose so that an outstretched hand, offering little but not a slap, is received with relief.”
IMAGE CREDIT: “Donald Trump” by Gage Skidmore, via Flickr. Licensed under CC BY-SA 2.0. Image adjusted for layout.