December 21, 2025 Global Economics 0

Commentary: 5 more risks to the faltering Trump economy

Had enough?

The first two months of Donald Trump’s presidency have unnerved investors, sapped consumer confidence, and left businesses reluctant to invest. This from a president promising a new “golden age” in America.

The gloom may lift someday. Investors want to believe that Trump’s onslaught of import tariffs will taper off, that his purge of the federal bureaucracy will run its course — and that Trump’s economic policies will become more orderly and predictable. Maybe Trump will just start playing more golf and lose interest in upending everything.

But calmer days are not here yet, and new worries are gathering. Here’s the next set of challenges for markets and the economy.

The ‘big’ tariffs

Trump says the “reciprocal” tariffs he’s planning to unveil on April 2 will be “the big one,” as if the tariffs he has already imposed on imports from Canada, Mexico, and China — plus steel and aluminum imports from many other countries — are just a sampler. These new tariffs are supposed to be “reciprocal” because they’ll do unto other countries as they do unto us: impose the same import duties and other barriers that those countries apply to American products.

With his flair for the big reveal, Trump has only teased what might be coming on April 2.

Treasury Secretary Scott Bessent said there’s a “dirty 15” list of countries Trump will focus on most. That most likely includes countries that have a trade surplus with the United States, impose relatively high tariffs on US imports, or take other steps to keep American products out of their domestic markets. Applying those criteria generates a list of countries that includes China, the European Union, Mexico, Vietnam, Ireland, Germany, Taiwan, Japan, South Korea, Canada, India, Thailand, Italy, Switzerland, and Malaysia, according to investing firm Raymond James.

Some economists think these new tariffs could be a “shocker” that is more severe than what markets seem to be anticipating, with taxes of 50% or more on key product categories. Others, by contrast, hope the threat of reciprocal tariffs is more of a ploy to give Trump leverage in trade negotiations. Markets have already underestimated the severity of Trump’s tariffs.

Surely that couldn’t happen again. Right?

Layoffs

Everybody knows Trump is trying to slash the federal workforce, with those layoffs likely to show up in employment data during the next several months. No biggie, Trump seems to think. They’re just bureaucrats. It’s not like those are real jobs.

What about autoworkers? Are those real jobs? The autoworkers union is bracing for layoffs as car sales slow and tariffs raise costs. Wall Street is cutting thousands of jobs as Trump disruptions sow uncertainty and slow investment. Layoffs in February were the highest since the COVID-19 recession in 2020. As job losses rise, fewer people have the income to buy stuff, and the main driver of the whole US economy — consumption — downshifts. People who hear of layoffs also get worried and rein in their own spending, dinging consumption more.

Foreign stocks

They’re doing a lot better than their American counterparts at the moment. Stocks in Germany, China, and Mexico, for instance, have outperformed the US market since Trump took office in January. The main driver of the whole US economy — consumption — downshifts. People who hear of layoffs also get worried and rein in their own spending, dinging consumption more.