According to most independent observers, President Donald Trump inherited a strong economy from former President Joe Biden. GDP grew by about 11% over Biden’s four-year term. Unemployment was at 4.1% in his last month in office after hitting a 55-year low of 3.4% in January and February 2023. Biden managed to reduce inflation to 2.9% before leaving office, down from a post-COVID rate of about 9% earlier in his term. He created approximately 335,000 jobs per month, including 765,000 manufacturing jobs, and saw the S&P 500 grow by about 55%.
Except for continued growth in the S&P after Trump extended his 2017 corporate tax cuts, Trump’s numbers are heading in the wrong direction. Inflation and unemployment are up, job creation hit negative growth in June, and economic growth has slowed. There are several reasons for this economic disruption. Three of them — tariffs, workforce depletion and sour international relations — are addressed here.
Tariffs: Trump imposed significant tariffs (taxes) on many imports coming into the U.S. This has hurt both large and small businesses. Large retailers rely on imports, especially from China, for items they sell in their stores. Other large businesses, such as Coca-Cola, rely on imported raw materials, including aluminum, to manufacture their cans. Construction companies import wood products from Canada. When they have to charge more for their lumber, builders need to charge more to build homes. A tariff on one product has a significant ripple effect on multiple businesses and companies, ultimately impacting small business owners who must pass on the extra taxes to consumers, thereby contributing to inflation.
Workforce depletion: Trump is depleting America’s immigrant workforce, critical for farming, construction, manufacturing and the hospitality industry. At the same time, he is firing tens of thousands of federal workers. There are multiplier effects when over a million workers are removed from the economy. First, American farmers and businesses can no longer find workers to pick their crops or run their factories. A secondary effect is that these missing employees are no longer contributing to the national, state and local economies, such as paying taxes, rent and purchasing fuel and groceries.
Forty percent of U.S. farmworkers are undocumented, and Trump wants them deported. Vice President JD Vance says that Americans will take their place, but farmers know better. For many of them, this summer’s growing season has already been a loss due to Trump’s deportations and threats of deportations that have scared farm workers from working. The direct economic impact on farmers is, of course, significant. But consumers also suffer from having to pay higher prices for farm products.
Undocumented workers in America contributed about $5 trillion of private-sector gross domestic product over the past decade, according to a study conducted at Queens College CUNY. A study by the New American Economy Research Fund found that undocumented Mexican immigrants in 10 states pumped $82 billion into the local economies of those 10 states. They also added $11 billion to the Social Security Fund and $2.7 billion to the Medicare Fund. Real people, real money, and significant disruptions to the U.S. economy. Trump can’t remove this amount of money from the economy without having an adverse effect on economic growth.
When ICE raided a Hyundai battery plant under construction in Georgia and deported about 475 workers, local grocery stores, gas stations and other small businesses stated that they had lost most of their customers. According to Politico, “many of the South Koreans rounded up in the immigration raid are engineers and equipment installers brought in for the highly specialized work of getting an electric battery plant online.” The new factory, now on hold, would have provided 8,000 U.S. manufacturing jobs, raising questions about whether Trump is serious about increasing manufacturing jobs in America.
Biden created 765,000 new manufacturing jobs during his four years in office, according to the Bureau of Labor Statistics. Trump has lost 78,000 manufacturing jobs during his first seven months in office, mainly due to his tariffs and workforce depletion. The unemployment rate has risen to 4.3% after being below 4% for 27 consecutive months (February 2022 through April 2024) during the Biden administration
The primary issue with immigrants, documented and undocumented, is that all sectors of the U.S. economy are struggling to find workers. Efforts by Democrats in Congress to streamline the application process for immigrant workers, currently in the country and those trying to come in, have been rejected by Republicans because, instead of trying to fix the problem, they want immigration to remain a campaign issue. Well, it is becoming a negative campaign issue for them.
Like it or not, undocumented workers in the U.S. are vital to our economy, and Republicans are finding out the hard way. As stated by economists at the Bank of America, Trump’s immigration policies have “dramatically choked off the labor supply” for “sectors that rely heavily on immigrant labor.”
Sour international relationships: Trump has alienated essential trading partners, like Canada and India, with tariffs and insults. Jokes about Canada becoming a U.S. state and disrespecting the Canadian prime minister by referring to him as “governor” have soured Canadians on the United States. As a result, Canadians are boycotting American products. American businesses that export to Canada are seeing significant decreases in trade. And Trump’s policies are pushing some, like India, to develop stronger trading ties with China. This is great for China; not so much for the U.S.
Many people in Canada and elsewhere are avoiding America as a vacation destination due to our tariffs, insults and the treatment of international visitors at the border. According to the World Travel & Tourism Council, the U.S. was the only country out of 184 studied forecast to see a decline in international tourism in 2025. Forbes estimates that Trump’s policies will cost the U.S. up to $30 billion in lost tourism businesses this year alone, and bookings for 2026 are down. This is especially harmful for small businesses.
During the first six months of Trump’s second term, Canadian tourism to the U.S. fell nearly 18% from 2014, a drop of almost 2 million visits, according to the U.S. International Trade Administration. And while the U.S. is losing visitors, other nations such as Spain are seeing a significant increase as tourists select alternative destinations.
These three variables have significantly slowed economic growth in the U.S. When economic growth slows, businesses stop hiring and start reducing their workforce. For example, as reported by the Wall Street Journal, ConocoPhillips and Chevron, two major oil companies, have announced that they will cut 20-25% of their workforce, citing tariffs on steel and aluminum, as well as economic uncertainty due to Trump’s trade and energy policies.
Trump denies the negative numbers. He told his supporters that the employment data were fake, insisted that “the economy is booming,” and that Americans were experiencing the “best economy we’ve ever had” and the “hottest in the world.” He said on Fox News last Friday that he “already solved inflation” and “costs are down.” “I’ve solved just about every problem,” he added.
Trump has also said recently that better job numbers could be a year away and that Americans need to “be strong, courageous and patient.” That sounds a little less promising than the “best economy we’ve ever had.”
Tom Zirpoli is the Laurence J. Adams Distinguished Professor of Special Education Emeritus at McDaniel College. He writes from Westminster. His column appears on Wednesdays. Email him at tzirpoli@mcdaniel.edu.
