the United States has experienced a series of economic policy shifts under President Donald Trump that have raised concerns about the nation's financial stability. Key policies, including aggressive trade measures, tax reforms, and challenges to institutional independence, are contributing to a trajectory that some analysts fear could lead to financial difficulties.

Escalation of Trade Wars

One of the most contentious aspects of Trump's economic strategy has been the implementation of substantial tariffs on major trading partners such as Canada, Mexico, and China. In March 2025, the administration imposed a 25% tariff on imports from these nations, aiming to reduce trade deficits and protect domestic industries. However, these measures have provoked swift retaliation. Canada, for instance, announced tariffs on over $100 billion worth of American goods, while China imposed tariffs of up to 15% on U.S. agricultural exports. These actions have strained diplomatic relations and disrupted global supply chains, leading to increased costs for both businesses and consumers.
APNEWS.COM

The financial markets have reacted negatively to these developments. The S&P 500 experienced a 1.8% drop—the largest daily decline of the year—erasing gains since the last election. The U.S. dollar hit a three-month low, reflecting growing investor anxiety about the potential for a prolonged trade war and its implications for economic growth.
THEGUARDIAN.COM

Tax Policies and Fiscal Deficits

The administration's tax policies have also come under scrutiny. The 2017 Tax Cuts and Jobs Act significantly reduced corporate tax rates, aiming to stimulate investment and economic growth. While there was an initial boost in corporate profits and stock buybacks, the long-term effects have been less favorable. Corporate tax receipts fell by 31% in fiscal year 2018, contributing to a budget deficit increase from $666 billion in 2017 to $779 billion in 2018—a 17% rise.
WIKIPEDIA

Looking ahead, discussions about extending the provisions of the 2017 tax cuts have raised alarms. The Congressional Budget Office estimated that such extensions could add $4.6 trillion to deficits over the next decade. Economists warn that this could exacerbate inflationary pressures and further deteriorate the nation's fiscal health.
WIKIPEDIA

Erosion of Institutional Independence

Another area of concern is the administration's approach to established economic institutions. Reports indicate plans to limit the independence of the Federal Reserve by allowing presidential influence over interest rate decisions and subjecting the Fed to oversight from the Office of Management and Budget. Such actions could undermine investor confidence and destabilize financial markets, as the perception of a politicized central bank may lead to increased economic volatility.
WIKIPEDIA

Inflationary Pressures

The combination of expansive fiscal policies and trade tensions has contributed to rising inflation. In 2025, inflation stood at 3%, surpassing the Federal Reserve's target. Economists caution that continued trade disputes and deficit-financed tax cuts could lead to further inflationary spikes, eroding purchasing power and potentially prompting aggressive monetary tightening that could stifle economic growth.
THE AUSTRALIAN

Impact on Consumers and Businesses

The ripple effects of these policies are being felt across various sectors. Consumers face higher prices on everyday goods due to tariffs, with estimates suggesting an annual increase in household expenses of up to $1,200. Major retailers have warned of impending price hikes, which could dampen consumer spending—a critical driver of economic growth.
MARKETWATCH

Businesses, particularly those reliant on international trade, are grappling with increased costs and supply chain disruptions. The manufacturing and agricultural sectors are among the hardest hit, facing retaliatory tariffs that make U.S. goods less competitive abroad. This environment of uncertainty hampers investment decisions and could lead to job losses, further straining the economy.
VOX.COM

Conclusion

While the intention behind these economic policies may be to protect domestic industries and assert economic sovereignty, the cumulative effects suggest a more precarious outcome. Escalating trade wars, burgeoning fiscal deficits, challenges to institutional independence, and rising inflation collectively pose significant risks to the nation's financial stability. Without strategic adjustments, these policies may steer the United States toward economic difficulties, affecting both current and future generations.