The economy can be distilled into a straightforward formula: income less expenditures. When it appears that our incomes are increasing at a rate that outpaces prices, the economy is demonstrating positive health. When they are not functioning properly, the situation is unfavorable. President Donald Trump appears to be engaging in a different assessment. Rather than emphasizing the cost of living or affordability—terms that Trump has consistently dismissed as a “hoax”—the president opts to highlight the revenue being generated for the US Treasury through tariffs and business investment. He often discusses the substantial revenues that America is generating, contrasting his “hottest ever” economy with the allegedly “dead” state of the country during former President Joe Biden’s administration.
“We’re really taking in trillions of dollars if you think about it,” Trump stated. “This represents capital inflow into our nation directed towards the establishment of automotive manufacturing facilities and artificial intelligence production sites.” We aim to maintain our current course, as an event of this magnitude has never occurred in the annals of history. While heightened revenue and investment undoubtedly contribute positively to the US economy, Trump and the Republican party are confronted with an emerging political crisis rooted in affordability rather than economic growth. The economy has been progressing steadily, perhaps to the astonishment of numerous Americans who rate the economy poorly due to the elevated cost of living. Increasing revenue and expanding business operations can contribute to tackling issues of affordability. However, establishing those connections proves to be complex, and Trump’s assertion of “actually, we’re rich” does not seem to resonate with the increasingly discontented consumer base. In this “windchill economy,” where the financial circumstances of Americans appear more dire than they actually are, Trump is increasingly failing to connect with struggling Americans, opting instead to communicate in a manner that does not resonate with their experiences. Trump frequently reiterates two fundamental themes regarding his economic policy. Tariffs and various initiatives are generating hundreds of billions of dollars in additional revenue. Major corporations have pledged trillions of dollars toward new investments in the United States. “Let me tell you about the real economy,” Trump stated to Politico on Tuesday when addressing a question regarding affordability. “We have $18 trillion entering our nation. Biden accumulated less than $1 trillion over a span of four years. While Trump’s calculations may be exaggerated, it is accurate to state that tariff revenue has increased by over $200 billion during his administration in comparison to Biden’s.
Numerous companies and nations have committed to both near- and long-term investments, spurred by Trump’s encouragement, with total pledges amounting to trillions of dollars. Trump has also introduced a $1 million “Gold Card” visa that commenced this week, which he claims will generate billions of dollars for the nation. Commerce Secretary Howard Lutnick has stated that the new visas are projected to generate up to $1 trillion for the US Treasury. Trump has allocated billions of taxpayer dollars to invest government resources in enterprises deemed essential for national security by his administration. Due to stock market gains, Trump asserted that those investments are already contributing millions of dollars to the value of America’s investments. “The price went through the roof,” Trump said Tuesday about his administration’s 10% stake in Intel. “I made $40 million.” “That subject remains largely unaddressed.” The theory posited by the Trump administration suggests that both actual and anticipated revenue increases could finance the president’s frequently proposed $2,000 stimulus checks, as well as the costly tax cut enacted earlier this year. Trump has asserted that revenue generated from tariffs could entirely substitute for the income tax obligations of Americans. Ultimately, the administration has asserted that tariffs could potentially finance America’s substantial debt independently. In the previous year, the United States allocated $1.2 trillion to service its debt, which, at approximately $38 trillion, surpasses the nation’s total economic output. Generating tax revenue to alleviate the debt implies a reduction in interest and financing costs, which could subsequently release funds for programs and benefits that assist in enhancing affordability.
On Tuesday, Trump stated that the tariff revenue financed the $12 billion bailout recently allocated by his administration to farmers. “We’ve taken in so much money with the tariffs now that it’s such a pleasure,” Trump stated. “Without it, assistance would not be feasible.” We currently hold the status of being the wealthiest nation globally. In a separate discourse, Trump often emphasizes the potential of pledged business investments to generate manufacturing and AI-related employment opportunities within the United States. Tariffs may encourage businesses to repatriate overseas factories and outsourced labor back to the United States. “Car companies are returning to us after having departed years ago.” AI is coming in at levels never seen before. “Factories are opening up all over the country,” Trump stated to Politico. “Ultimately, what does it reduce itself to?” Employment opportunities. You’re going to have jobs like you’ve never seen in the United States.” The issues with Trump’s theory are straightforward: The calculations are flawed, and any advantages those proposals might yield in the future will not assist Americans currently facing challenges with the cost of living. The Trump administration generated approximately $200 billion in new tariff revenue this year. While it is not insignificant, in a $30 trillion economy, it represents merely a drop in the bucket. It is insufficient to advocate for $2,000 stimulus checks for each American household or to abolish income taxes. It is undoubtedly insufficient to address the $38 trillion debt. The investment pledges, while appreciated, remain merely commitments, lacking any enforcement mechanism. Companies often gain notoriety for their presence at high-profile ribbon-cuttings alongside presidents, only to later retract their commitments. A notable example is Foxconn, which withdrew from plans shortly after unveiling a much-publicized Wisconsin factory in collaboration with Trump during his initial term.
A significant portion of the companies’ accounting reflects prior obligations. In this June 28, 2018 image, President Donald Trump is seen touring Foxconn alongside Foxconn chairman Terry Gou and SoftBank CEO Masayoshi Son in Mt. Pleasant, Wisconsin. Even if all of the pledges materialize into tangible projects, factories are currently facing challenges in securing qualified or willing workers. The potential for new factories to significantly reinstate manufacturing jobs remains uncertain, particularly given that a substantial portion of these jobs has been displaced by automation over the last few decades. In the current economic landscape, tariffs are exacerbating the issue of affordability rather than alleviating it. Federal Reserve Chair Jerome Powell on Wednesday attributed the acceleration of prices beyond the Fed’s 2% long-term annual inflation target this year directly to Trump’s tariffs. The fundamental issue with political messaging in the current economy lies in the “windchill” phenomenon, where the data appears favorable, yet the actual experiences of countless Americans facing financial difficulties tell a different story. Trump can accurately articulate the narrative of robust overall economic growth and consumer spending; however, such assertions will hold little significance for individuals if they perceive an inability to maintain their financial stability. However, Trump is complicating his position by reaffirming policies that are unlikely to yield immediate, significant benefits for the financial well-being of Americans, while characterizing the windchill factor as a “con job” or a “scam.” Trump is articulating his views in a manner reminiscent of a business executive, emphasizing that revenue growth serves as the foundation for profit and stability. This is undoubtedly significant for the American economy as well. However, the economy should not be conflated with a business. The economy fundamentally consists of individuals, and a significant number of them are experiencing distress.