President Donald Trump’s war with Iran threatens to deal a severe blow to a global economy still grappling with the impact of his historic tariff hike.

For Europe, sustained higher energy prices would take the economy to the brink of recession. For the US, they would place the Federal Reserve in an impossible position — stuck between a war that pushes inflation higher and a president demanding that interest rates come down. For China, the end of discounted Iranian oil imports adds to strain from Trump’s tariffs and a real estate collapse.

In the first days of the fighting, the intensity is high and the endgame uncertain. Bloomberg Economics has modeled scenarios for what lies ahead, and what they mean for oil prices, major economies, and the future of Iran.

It is, of course, possible that Washington and Tehran find an off-ramp, oil settles back at its pre-escalation average of $65 a barrel, and the global economy dodges a blow.

The latest signs, though, suggest there’s worse to come….

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The war in Iran threatens to unleash a wave of inflation at a time when economies worldwide are already in a tight spot. Read more in the Canada Daily newsletter. https://t.co/iWX5sR3kZB

— Bloomberg (@business) March 4, 2026

President Donald Trump said the US would keep up its military offensive against Iran for as long as it takes, outlining for the first time a set of four objectives he hopes to accomplish toward reducing the threat he said is posed by Tehran.

“We projected four to five weeks, but we have capability to go far longer than that,” Trump said at a White House event on Monday about the timeline he foresaw for the campaign. “Whatever the time is, it’s OK. Whatever it takes.”

The president has faced mounting pressure to better define the goals of his extraordinary military intervention on Iran, after days of sending mixed signals about what he wanted to achieve.

Trump said that the effort, which launched on Saturday, aims to eliminate Iran’s missile capabilities, destroy the country’s navy, cut off its path to a nuclear weapon and ensure that the government “cannot continue to arm, fund and direct terrorist armies outside of their borders.”

Notably, the president did not mention regime change as one of the campaign’s goals.

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President Trump said the US would keep up its military offensive against Iran for as long as it takes, outlining for the first time a set of four objectives he hopes to accomplish towards reducing the threat posed by Tehran. https://t.co/S3SA3Hxjku

— Bloomberg (@business) March 2, 2026

The joint attack brings war to the country for the second time in eight months and risks a wider regional conflict in one of the most economically sensitive parts of the world.

🚨 Breaking: USS Abraham Lincoln strike group is now attacking Iran's navy pic.twitter.com/CD9rTMWucv

— Dr. Eli David (@DrEliDavid) February 28, 2026

Donald Trump’s new 15 per cent global tariff will most greatly benefit countries he has singled out for heavy criticism, including China and Brazil, data analysis shows.

An examination of the new regime by independent trade monitoring body Global Trade Alert found that Brazil will enjoy the biggest reduction in average tariff rates — falling by 13.6 percentage points — followed by China, with a 7.1 percentage point reduction.

Long-standing US allies including the UK, the EU and Japan will suffer the largest hit from the new levy, which the US president introduced after the Supreme Court ruled much of his previous trade policy unlawful on Friday.

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Trump’s new flat-rate tariff will boost China and Brazil https://t.co/lGsVynEEwa

— Financial Times (@FT) February 22, 2026

The Supreme Court’s 6-3 decision on Friday wiping out a chunk of President Donald Trump’s tariff regime is a triumph for the Constitution’s separation of powers and the individual liberty that it protects.

The decision by Chief Justice John G. Roberts Jr. says nothing about whether the tariffs are good or bad policy. But it recognizes that they are a major tax, and that raising revenue is a “distinct” power that belongs to Congress. There’s a reason the 18th century American revolutionary slogan was “no taxation without representation.” Taxing citizens without consent from their elected representatives is antithetical to the American project.

Congress never approved the worldwide tariffs at issue in the case. Trump told the court they were authorized by a 1977 law, the International Emergency Economic Powers Act. No president has used IEEPA to impose tariffs, but it contains the phrase “regulate … importation.” Trump said that was sufficient authorization for him to throw out the rest of the tariff schedules and set import taxes however he pleased.

Roberts saw the flimsiness of that reasoning. “Based on two words separated by 16 others,” he wrote, “the President asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time. Those words cannot bear such weight.” Indeed. The executive branch can’t be allowed to grab hundreds of billions of dollars from the American people on such a thin legal basis.

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The Supreme Court’s decision to invalidate the Trump administration’s broad tariffs strips the president of a central instrument of his foreign policy, undercutting his ability to coerce global leaders and reshape world order in his second term.https://t.co/mktSe8eQIw

— The Washington Post (@washingtonpost) February 20, 2026

Starting with the 2024 decision that gave President Trump substantial immunity from prosecution and continuing through a score of emergency orders provisionally greenlighting an array of his second-term initiatives, Mr. Trump has had an extraordinarily successful run before the Supreme Court.

That came to a sudden, jolting halt on Friday, when Chief Justice John G. Roberts Jr., writing for six members of the court, roundly rejected Mr. Trump’s signature tariffs program. It was the Supreme Court’s first merits ruling — a final judgment on the lawfulness of an executive action — on an element of the administration’s second-term agenda. It amounted to a declaration of independence.

It also served as another in a series of clashes between the leaders of two branches of the federal government cut from very different cloth: the controlled, cerebral chief justice and the biting, brazen president.

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The Supreme Court’s Declaration of Independence https://t.co/c3j3a7tlnQ via @NYTimes

— Luba Howard 🇺🇦 (@marynlm) February 20, 2026

It’s hard to recall a regulator who has done as much damage to medical innovation in as little time as Vinay Prasad. In his latest drive-by shooting, the leader of the Food and Drug Administration’s vaccine division rejected Moderna’s mRNA flu vaccine without even a cursory review. This is arbitrary government at its worst.

The FDA rarely refuses to review a drug or vaccine application. Our sources say the FDA has rejected only about 4% of applications without a review, typically when they are missing important information. That wasn’t the case with Moderna.

Dr. Prasad spiked Moderna’s flu vaccine because its Phase 3 trial was putatively not “adequate and well-controlled.” He quibbled that the control group in Moderna’s late-stage trial didn’t receive the “best-available standard of care.” He decides what is “best.”

Moderna launched a global randomized controlled trial in September 2024 with 41,000 participants, half of whom received its vaccine. The other half received a standard flu vaccine as a control. The FDA blessed its trial design, and agency staffers gave Moderna a thumbs up to apply for approval last August based on the results. Its vaccine was 27% more effective at preventing symptomatic cases of flu and 49% more effective against hospitalization than the standard flu vaccine.

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The WSJ Editorial Board weighs in:
“It’s hard to recall a regulator who has done as much damage to medical innovation in as little time as Vinay Prasad. In his latest drive-by shooting, the leader of the Food and Drug Administration’s vaccine division rejected Moderna ’s mRNA flu…

— Amy Siskind 🏳️‍🌈 (@Amy_Siskind) February 13, 2026

I am not given to sentimental displays of patriotism. I own a Team U.S.A. soccer jersey because I love the sport, but that may be my only apparel featuring the flag. I have been to my fair share of Fourth of July parades and fireworks displays, but I am also familiar with Frederick Douglass’s 1852 speech, “What to the Slave is the Fourth of July?” which was delivered on July 5 to acknowledge those not included in the freedoms celebrated on July 4.

Douglass contrasted the lauding of freedoms won while enslaving large portions of the populace. He said, “The blessings in which you, this day, rejoice, are not enjoyed in common. The rich inheritance of justice, liberty, prosperity and independence, bequeathed by your fathers, is shared by you, not by me. The sunlight that brought light and healing to you has brought stripes and death to me.” This Fourth of July, he said, “is yours, not mine. You may rejoice, I must mourn.”

Like many of us, I know well our country’s contradictions.

Despite this, I am a sucker for the Olympics. Seeing our athletes decked out in the red, white and blue during the opening ceremony, or witnessing their tears on the podium as the anthem plays, stirs even my heart, almost despite myself. I experience something approaching national pride when my fellow citizens accomplish feats far beyond my ability.

With the Winter Games kicking off, this year feels different. The shame I feel for how our country is treating its citizens — and those who long to be its citizens — is hard to ignore….

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I wrote an article about cheering for the USA Olympic team while opposing many of the actions of team MAGA for @nytopinion https://t.co/Tcv0jvHqOY

— Esau McCaulley (@esaumccaulley) February 6, 2026

I will take comments on this submitted by email only to KSHarmon[at]mindspring[dot]com.

President Trump announced on Friday that he was nominating Kevin M. Warsh to serve as the next chair of the Federal Reserve, positioning the former central bank governor to take a pivotal role in steering an institution that has faced a barrage of attacks from the administration over its reluctance to more aggressively lower interest rates.

In a post on Truth Social, Mr. Trump praised Mr. Warsh, saying, “He will go down as one of the GREAT Fed Chairmen, maybe the best.”

“On top of everything else, he is ‘central casting’ and will never let you down,” the president wrote.

Mr. Trump repeated that line during remarks at the White House and said that while he did not get a commitment from Mr. Warsh to cut rates, he expected that he would do so.

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President Trump picks a reinvented Kevin Warsh as the next chair of the Fed. Warsh, who served on the US central bank's Board of Governors from 2006 to 2011, would succeed Jerome Powell when his term ends in May. As a Fed governor from 2006-11, Warsh called for higher rates even… pic.twitter.com/qtG5DGUtUv

— Holger Zschaepitz (@Schuldensuehner) January 30, 2026

Investors are betting the Trump administration will run the economy “hot” ahead of midterm elections, with buoyant stocks and a weaker dollar reflecting expectations of strong growth and rising inflation.

A string of robust economic data has defied predictions of a slowdown in the US, sending credit spreads to the tightest levels of the century and helping stocks hit fresh record highs this month.

At the same time, fund managers said there is a growing belief that President Donald Trump’s tax cuts, deregulation push and campaign for lower interest rates will add more fuel to the economy this year, as the president seeks to bolster support ahead of November’s congressional polls. “There is a carefully engineered plan to have the US economy humming into the summer,” said Arif Husain, head of global fixed income at T Rowe Price.

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Investors bet on ‘hot’ US economy heading into midterm elections https://t.co/Qs7rCZ017g

— Financial Times (@FT) January 28, 2026

The line from Thucydides, “The strong do what they can and the weak suffer what they must”, is getting quite the airing of late. You are meant to nod gravely along to it, as though it expresses a bitter but universal truth about international relations.

Does it, though? The phrase implies that a country becomes more aggressive as it grows more powerful. Well, the US was never mightier than it was around the time of Trump’s birth in 1946, when it made half of the manufactured goods in the world and had a nuclear monopoly too. With all this power, the US didn’t “do what it could” to the weak. Instead, it set up the Marshall Plan and Nato, those masterpieces of enlightened self-interest. It rebuilt Japan and Germany as pacifist democracies. The belligerent turn in American behaviour has in fact come during its relative decline.

Leadership explains some of this, in that Harry Truman was “better” than Trump, but only some. The rest is structural. It is easier for a nation to be magnanimous from a great height. Paranoia and aggression set in when that position slips. As such, we should expect a volatile US until it gets used to the role of being a, not the, superpower. Britain and France got there in the end, despite having to fall much further.

No one ever quotes the other bit of the famous Dylan Thomas poem about decline. After nagging the reader to “rage against the dying of the light”, he concedes that giving up makes more sense: “wise men at their end know dark is right.”

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Always beware a declining superpower – https://t.co/4Xah6qhSiO via @FT
Like a wounded tiger, always most dangerous in that state

— Marshall Auerback (@Mauerback) January 21, 2026

Most years, presidents don’t have much impact on the economy; it is just too big and complicated.

This year won’t be like most years. President Trump is taking unprecedented steps to run the economy hot, and there is an excellent chance he’ll succeed.

Washington has three big levers that affect growth: fiscal policy (taxes and spending), monetary policy (interest rates) and credit policy (the ease of borrowing). Historically, they were not coordinated: Fiscal policy followed the congressional cycle, monetary policy was set by an independent Federal Reserve and credit policy reflected often random decisions by regulators.

This year, all three are dialed toward stimulus, reflecting a single-minded focus by Trump and congressional Republicans on faster economic growth. They hope that will deliver victory in the November midterm elections.

In the process, they are compromising other goals: taming debt, Fed independence and long-term financial stability. The consequences of that come later.

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Under my taxonomy, there are 3 macro policy levers: fiscal, monetary and credit. This year, Trump has dialed all 3 towards stimulus in order to run the economy hot. This is unprecedented, and will probably work. The costs come later. https://t.co/7RTaSK2I5D

— Greg Ip (@greg_ip) January 14, 2026

A new round of border clashes between Thailand and Cambodia and resurgent fighting in eastern Congo, two conflicts President Trump claimed to have resolved, have shown the constraints of his high-speed pursuit of peace.

Since the start of his second term, Trump has leveraged the economic and military might of the U.S. to get warring parties in several deep-rooted international conflicts to the negotiating table and extract hasty peace deals.

In June, the foreign ministers of the Democratic Republic of Congo and Rwanda signed an agreement meant to end a three-decade-long conflict, a deal Trump administration officials said would open the Congo’s mineral-rich east to potentially billions of dollars in U.S. investment.

Weeks later, Trump threatened to suspend talks on lowering high “reciprocal” tariffs for Thailand and Cambodia if the two nations continued fighting over their disputed border. The countries’ leaders, who faced 36% tariffs on all exports to the U.S., agreed to a cease-fire days later and signed a more detailed accord at a ceremony with Trump in October.

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A new round of border clashes between Thailand and Cambodia and resurgent fighting in eastern Congo have shown the constraints of President Trump’s high-speed pursuit of peace https://t.co/k8gpJmlUyI

— The Wall Street Journal (@WSJ) December 11, 2025

Putin knows he can’t defeat NATO in a head-on fight, especially given how badly the war in Ukraine has gone for Russian forces. His only hope is to defeat it politically by undermining its cohesiveness, which he tries to do all the time, said Ed Arnold, a former British army infantry officer who specializes in European security analysis for the RUSI think tank.

The U.S.’s latest peace plan would go a long way toward dividing NATO, by proposing what would amount to an amnesty for Russia for the invasion, allowing it to re-enter the G-8 club of rich countries and pursue joint economic development plans with the U.S. in areas like the Arctic.

“That would create huge divisions within the trans-Atlantic partnership,” Arnold said. “Politically, Russia is on the cusp of winning.”

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Trump’s Push to End the Ukraine War Is Sowing Fresh Fear About NATO’s Future

Washington’s latest peace efforts have jolted the trans-Atlantic alliance https://t.co/C3FLsf5mXm via @WSJ

— Nino Brodin (@Orgetorix) December 2, 2025

The Trump administration is wielding the possibility that parts of the economy are in a recession as it raises pressure on the Federal Reserve to cut interest rates, hoping to ensure that the central bank will bear the blame for any economic weakness.

Treasury Secretary Scott Bessent and Stephen Miran, President Trump’s appointee to the Fed’s Board of Governors who is on a temporary leave from his job leading the White House’s Council of Economic Advisers, this week struck a downbeat tone about the health of the world’s largest economy. Mr. Bessent went so far as to say some sectors were already contracting. He did not specify which sectors, but high mortgage rates have put housing and adjacent industries such as construction under pressure.

“I think that there are sectors of the economy that are in recession,” Mr. Bessent said on CNN on Sunday. He described the economy as being in a “period of transition” because of a pullback in government spending to reduce the deficit. He called on the Fed to support the economy by cutting interest rates.

Mr. Bessent’s remarks added to pressure on the Fed and deflected blame from Mr. Trump in case the economy does ultimately face a downturn, reinforcing a strategy that has been in place since the start of the year. As the administration has imposed aggressive tariffs on nearly all of America’s trading partners and slashed federal spending, potentially slowing growth, it has sought to pin blame squarely on the Fed in the event of an economic downturn.

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New w/ @arappeport: The Trump admin is wielding the possibility that parts of the economy are in a recession in an attempt to raise pressure on the Fed to cut rates. The hope is that the central bank will bear the blame for any downturn https://t.co/KWNqktMXov @nytimes

— Colby Smith (@colbyLsmith) November 4, 2025

President Trump’s global tariffs ran headlong into a skeptical Supreme Court on Wednesday, with justices across the spectrum expressing doubt that a 1970s emergency-powers law could be read to provide the president unilateral authority to remake the international economy and collect billions of dollars in import taxes without explicit congressional approval.

But even if the court strikes down the tariffs Trump initiated on his self-declared Liberation Day last April, the justices gave little indication how they might unwind the president’s signature economic policy and favorite diplomatic tool. That left unclear whether previously paid duties would be refunded or whether Congress could be invited to step in, perhaps by ratifying the levies retroactively.

“It seems to me like it could be a mess,” Justice Amy Coney Barrett said during the later stages of an oral argument that ran nearly three hours.

Solicitor General John Sauer took heat from all sides as he pressed the administration’s argument: that the president’s power to regulate foreign financial transactions when he declares an emergency includes the authority to impose tariffs. Tariffs were taxes, a majority of justices agreed, and many were dubious that Congress would so casually surrender to the executive its core constitutional power to raise revenue.

“The Constitution is structured so that if I’m going to be asked to pay for something as a citizen, that it’s through a bill that is generated through Congress,” said Justice Sonia Sotomayor. “But I’m not going to be taxed unless both houses” of Congress and the president “have made that choice.”

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And that is a wrap on the SCOTUS arguments.

After that argument, if I were the Trump Administration, I'd be burning the midnight oil over the next couple of weeks drawing up tariff backup plans. A clear majority of the Justices appeared skeptical that IEEPA authorizes the type…

— Peter Harrell (@petereharrell) November 5, 2025

President Donald Trump said he would immediately halt all trade negotiations with Canada, citing a Canadian advertisement against his signature tariffs plan featuring the voice of former President Ronald Reagan.

“TARIFFS ARE VERY IMPORTANT TO THE NATIONAL SECURITY, AND ECONOMY, OF THE U.S.A.,” Trump wrote on his Truth Social platform. “Based on their egregious behavior, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED.”

The ad in question comprises excerpts from an address Reagan gave in 1987 in which he defended the principles of free trade and slammed tariffs as an outdated idea that stifles innovation, drives up prices and hurts US workers.

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"Trump Terminates Trade Talks With Canada Over Reagan Tariff Ad" via @dwallbank , @decloet and Hadriana Lowenkronhttps://t.co/VygvQUuiEg

— Stephanie Hughes (@StephHughes95) October 24, 2025

Donald Trump urged Volodymyr Zelenskyy to accept Russia’s terms for ending its war in a volatile White House meeting on Friday, warning that Vladimir Putin had said he would “destroy” Ukraine if it did not agree.

The meeting between the US and Ukrainian presidents descended many times into a “shouting match”, with Trump “cursing all the time”, people familiar with the matter said. They added that the US president tossed aside maps of the front line in Ukraine, insisted Zelenskyy surrender the entire Donbas region to Putin, and repeatedly echoed talking points the Russian leader had made in their call a day earlier.

Though Trump later endorsed a freeze of the current front lines, the acrimonious meeting appeared to reflect the US president’s shifting position on the war and his willingness to endorse Putin’s maximalist demands. The meeting between Trump and Zelenskyy came amid a fresh push by the US president to end Russia’s war following the ceasefire secured between Israel and Hamas. 

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Trump urged Zelenskyy to accept Putin’s terms or be ‘destroyed’ by Russia https://t.co/AdUz5KW72A via @ChristopherJM @HenryJFoy @maxseddon @ak_mack

— Valentina Pop (@valentinapop) October 19, 2025

It is….increasingly likely that governments will…resort to inflation and financial repression to reduce the real value of their high debts, as they did in the decades after the second world war. The machinery for such a strategy is in place at central banks, which have a large footprint in bond markets. Already, populists such as Mr Trump and Nigel Farage in Britain attack their country’s central banks with proposals that would weaken the defenses against inflation.

Price rises are unpopular—just ask the hapless Joe Biden—but they do not need political support to get going. Nobody voted for them in the 1970s or in 2022. When governments cannot get their act together, and run economic policies that are unsustainable, bouts of inflation just happen. By the time markets wake up, it is too late.

All the more reason to think ahead and reflect on how inflation harms the economy and society. It redistributes wealth unfairly: from creditors to debtors; from those with cash and bonds to those who own real assets such as houses; and from those who agree on contracts and wages in cash terms to those wily enough to anticipate higher prices. It causes what John Maynard Keynes called an “arbitrary rearrangement of riches”. And that could happen just as societies are grappling with other transfers of wealth that the losers will also see as unfair: in the labour market, as AI takes on routine office work; and through inheritance, as baby-boomers bequeath vast property wealth to those lucky enough to have the right parents.

This multi-pronged upheaval of fortunes could wreck the middle class, which binds democracies together, and scramble the social contract.

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Governments are living far beyond their means. Sadly, inflation is the most likely escape. Politicians should think ahead and reflect on how much harm that would do https://t.co/6H1nzpKQQS pic.twitter.com/RF2ACF0MzV

— The Economist (@TheEconomist) October 16, 2025

Americans are set to pay more than half of President Donald Trump’s tariff costs as companies raise prices, according to economists of Goldman Sachs Group Inc.

US consumers will likely shoulder 55% of tariff costs by the end of the year, with American companies taking on 22%, the Goldman analysts wrote in an Oct. 12 research note to clients. Foreign exporters would absorb 18% of tariff costs by cutting prices for goods, while 5% would be evaded, they wrote.

For now “US businesses are likely bearing a larger share of the costs” as it takes time to raise prices, economists Elsie Peng and David Mericle wrote in the note. “If recently implemented and future tariffs have the same eventual impact on prices as the tariffs implemented earlier this year, then US consumers would eventually absorb 55% of tariff costs.”

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Americans are set to pay more than half of President Donald Trump’s tariff costs as companies raise prices, according to Goldman Sachs economists https://t.co/L04IgE1sdF

— Bloomberg (@business) October 13, 2025

Big Pharma has a big headache: Donald Trump. Lately drugmakers have had to contend with the American president’s pronouncements on everything from vaccines to paracetamol. In the coming days the pain is set to intensify. Intent on lowering prices, Mr Trump has given leading pharma firms until September 29th to comply with an executive order to peg their prices to the lowest charged in other rich countries—a rule he calls “most favoured nation” (MFN) pricing. If they do not, he thundered, they will face “every tool in our arsenal” against “abusive drug pricing”.

At the same time, the president wants to encourage homegrown manufacturing. He plans to impose a 100% tariff on branded drugs from October 1st, unless their makers are building factories in America. His administration is also pondering additional duties under a law allowing imports to be restricted on national-security grounds.

As is often the case, the Trumpian diagnosis contains a kernel of truth. Drug prices are indeed higher in America than elsewhere in the rich world. But the president’s two-point prescription upends a model that has long underpinned the highly globalised pharma industry, which could have unintended effects. It could leave Americans with fewer medicines but not cheaper ones, while in other countries drugs could be fewer and dearer. David Ricks of Eli Lilly, the world’s most valuable drugmaker, has warned that MFN pricing risks “the worst of two worlds”, importing Europe’s sluggish innovation while keeping American prices high.

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America’s drug prices were more than three times the average in other rich countries in 2022. As a consequence, it coughs up around 70% of global pharmaceutical profits from about half of global sales. This is partly because of how the market is organised https://t.co/eyJHSfPEB3

— The Economist (@TheEconomist) September 29, 2025

President Donald Trump wants lower interest rates. Achieving that objective will require overcoming bigger obstacles than Fed Chair Jerome Powell.

There are structural forces that drive the cost of borrowing, and right now they’re pointing up. Governments and businesses are piling on debt to pay for tax cuts, military spending, and AI investments — which means more demand for credit. As the Baby Boomers retire and China decouples from the US, the pool of saving to finance those loans is drying up.

Attacks on Fed independence risk shrinking the pool further. Investors don’t want to see the value of their hard-earned cash inflated away by a central bank under political control.

Add all of this together and it points to a world where 4.5% may be the new normal for ten-year Treasuries — the crucial rate for mortgages and corporate bonds, and the one Trump’s team says it wants to bring down. In fact, Bloomberg Economics analysis shows it’s more likely to trend above that figure than below it. For the world’s biggest economy, that means a wrenching transition.

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"Trump’s Interest Rate Obstacle Is Bigger Than Powell" https://t.co/CcNXpiVOuR pic.twitter.com/MLa29IeB2h

— Scott Lincicome (@scottlincicome) August 4, 2025

President Trump’s extensive tariffs have already started to generate a significant amount of money for the federal government, a new source of revenue for a heavily indebted nation that American policymakers may start to rely on.

As part of his quest to reorder the global trading system, Mr. Trump has imposed steep tariffs on America’s trading partners, with the bulk of those set to go into effect on Aug. 7. Even before the latest tariffs kick in, revenue from taxes collected on imported goods has grown dramatically so far this year. Customs duties, along with some excise taxes, generated $152 billion through July, roughly double the $78 billion netted over the same time period last fiscal year, according to Treasury data.

Indeed, Mr. Trump has routinely cited the tariff revenue as evidence that his trade approach, which has sowed uncertainty and begun to increase prices for consumers, is a win for the United States. Members of his administration have argued that the money from the tariffs would help plug the hole created by the broad tax cuts Congress passed last month, which are expected to cost the government at least $3.4 trillion.

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Trump’s Tariffs Are Making Money. That May Make Them Hard to Quit. https://t.co/0IaBKVoYff

— tony romm (@TonyRomm) August 3, 2025

Six months ago, few people would have anticipated that the United States would place a 15 percent tariff on exports from Japan, one of America’s closest and most longstanding allies. President Trump had campaigned on the idea of a 10 percent universal base-line tariff, plus a higher levy on China, but it was not clear whether he would follow through.

But on Tuesday, when Mr. Trump announced a trade deal that included a 15 percent tariff on Japanese products — the highest rate those goods have faced in decades — there was a palpable sense of relief. Stock markets in Asia and Europe rose. The Japanese Nikkei 225 surged by over 3.5 percent, while shares of Japanese automakers, which will also be charged a 15 percent tariff on their exports to the United States, jumped more than 10 percent. The reaction is a testament to just how quickly and completely Mr. Trump has transformed the world’s expectations regarding tariffs.

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Trump’s Tariffs Are the Highest in a Century. But After His Threats, They Seem Like a Relief. https://t.co/eevtXIQ4cC via @NYTimes

— ISMAIL (@iamaniku) July 23, 2025

His expensive tax cuts have been signed into law. His steep global tariffs are taking clearer shape. And his twin campaigns to deregulate government and deport immigrants are well underway.

With the major components of his agenda now coming into focus, President Trump has already left an indelible mark on the U.S. economy. The triumphs and turbulence that may soon arise will squarely belong to him.

Not even six months into his second term, Mr. Trump has forged ahead with the grand and potentially disruptive economic experiment that he first previewed during the 2024 campaign. His actions in recent weeks have staked the future of the nation’s finances — and its centuries-old trading relationships — on a belief that many economists’ most dire warnings are wrong.

Last week, the president enacted a sprawling set of tax cuts that he believes to be the ingredients for rapid economic growth, even as fiscal experts warned that the law may injure the poor while putting the U.S. government on a risky new fiscal path.

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With taxes and tariffs in place, Trump takes the reins of the U.S. economy 🇺🇸

Can he steer growth amid rising trade barriers? #Trump #USEconomy #Tariffs #TaxPolicy #EconomicUpdate #MarketWatch #TradeWar #FiscalPolicy pic.twitter.com/pJg4EqK2cK

— @LanCentralCoin – Daily (@CentralNewsYT) July 9, 2025

…the One Big Beautiful Bill act (BBB) that passed the Senate on July 1st and the House on July 3rd looks more like traditional tax-cutting, spending-slashing Republicanism worthy of Paul Ryan or Mitt Romney than it does a MAGA fantasy. Suddenly, business leaders are again willing to see Mr Trump as the populist from his first term: a man to be taken seriously but not literally.

Unfortunately, the BBB, which Mr Trump plans to sign into law on July 4th, is likely to cast a shadow over this sunny picture. It illustrates the long-term damage Mr Trump is doing to the foundations of America’s economy.

The bill’s main effect is to extend the tax cuts from Mr Trump’s first term which were due to expire. Republicans paint this as an extension of the status quo. Yet they, like the Democrats before them, ignore the fact that the status quo is unsustainable. Over the past 12 months America’s budget deficit has been an astonishing 6.7% of GDP. If the bill passes, the deficit will remain around that level and the country’s debt-to-gdp ratio will in about two years exceed the 106% reached after the second world war. Revenue from tariffs will help, but not enough to stop the ratio rising—meaning that the drift towards crisis will continue.

To the extent the bill tightens the belt, it does so in the wrong places. As life expectancies rise and the population ages, America should trim handouts to the old, for example by raising the retirement age. Instead, pensioners are getting a tax break and Republicans are cutting Medicaid, health insurance for the hard-up. Some sensible measures include reducing the ability of states to game the system for more federal cash. Yet according to official projections, the overall effect will be to add nearly 12m to the number of Americans without health insurance. That is a scandalous number for the world’s richest big country. Many of those who lose coverage will fall foul of new requirements that recipients must work. Such rules have in the past created an obstacle course of paperwork for claimants while failing to boost employment.

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The panic about tariffs has given way to cautious optimism. But Trumponomics 2.0 will erode the foundations of America’s prosperity https://t.co/d7Z1uq4Eca pic.twitter.com/raYf0JGOOv

— The Economist (@TheEconomist) July 3, 2025

In the days leading up to the final vote, the CRFB assessed that the measure would add between $3trn and $4trn to the deficit. It includes a smorgasbord of tax cuts whose fiscal effects are only partially offset by other reforms. The tax cuts include Mr Trump’s campaign promises to remove tax on tips and overtime pay. In theory those are temporary and will elapse when Mr Trump leaves office. In practice, once taxes are cut they often stay cut (as Republicans’ new accounting method implies). The bill would also set up “Trump accounts” for newborns, including one-off payments to new parents for the next three years. It would give big boosts to spending by the Department of Defence and to Immigration and Customs Enforcement, which the administration wants so that it can increase the number of people deported from America.

Modelling the effects of any legislation on economic growth is hard. But the tax cuts should provide a small boost in the short term. That might help to explain the current exuberance of the stockmarkets. Over a longer timeframe the picture is different (see chart 3). The House’s original bill would shrink America’s GDP by 2% by 2050, according to the Budget Lab at Yale, a research centre. That mainly reflects the impact of a bigger debt load leading to higher interest rates, which squeeze the private sector. Some other forecasters are more optimistic, thinking that the tax cuts will push more workers into the jobs market and incentivise investment, offsetting that impact.

America’s debt surged after the financial crisis of 2007–09 and the covid-19 pandemic. The ratio of debt to GDP is already close to the level reached after the second world war. By extending tax cuts that were set to lapse, without offsetting savings, the OBBB will drive it higher still. According to the CRFB, the Senate’s version as of June 30th would push debt to between 125% and 130% of GDP by 2034—well above the 117% forecast if the 2017 tax cuts were allowed to expire, and higher even than the 124% expected under the House bill….

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America’s Senate has passed the most consequential legislation of Donald Trump’s second term. Here are ten charts to show what impact it could have on the country https://t.co/umZDPjYugs

— The Economist (@TheEconomist) July 1, 2025

This period of 20 years is by no means the first time in U.S. history that military force, economic pressure, and diplomacy have been seen as alternatives to one another, as opposed to tools that must be applied simultaneously, to varying but carefully calibrated degrees, if a recalcitrant adversary is to be effectively constrained. The Trump administration must not repeat the mistake by now attaching too much significance to Saturday night’s stunning demonstration of American air supremacy.

For air power alone cannot suffice. One does not need to accept the cynical critique of Saturday night’s strikes by the former Russian president, Dmitry Medvedev. There are valid reasons to doubt that Iran’s nuclear program has been crippled, as Professor Jeffrey Lewis of the Middlebury Institute has argued. It is not clear what has become of Iran’s roughly 400 kilograms of percent-enriched uranium-235 which, if further enriched, would be enough for up to 10 nuclear weapons. Iranian trucks were on the move around Fordow before the U.S. strikes. So Iran may still have the ability to manufacture centrifuges and to resume enrichment.

It would be pleasing to imagine the amputation of Fordow setting back Iran’s nuclear program so far that it effectively restores the half-century-old non-proliferation regime. And it would not be entirely fantastical. After all, the use of force ultimately consigned the nuclear ambitions of the Iraqi and Libyan dictators to the trash can of history. With the benefit of hindsight, we can speculate that military action might also have thwarted the North Korean nuclear arms program.

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"As Kissinger often said, every success in foreign policy is just an admission ticket to the next crisis," writes Niall Ferguson. https://t.co/FhWGMLTnot

— The Free Press (@TheFP) June 23, 2025

In a moment of political decisiveness and courage, Trump deployed those bombs, despite strenuous objections from the “restrainers” in his administration and parts of the MAGA coalition.

“There’s no military that could’ve done what we did,” Trump said during a brief speech to the nation Saturday night. He is correct. As Niall Ferguson and former Israeli defense minister Yoav Gallant recently noted in these pages, Fordow was essentially impervious to assault. There was one bomb that could cut through its defenses: America’s GBU 57A/B Massive Ordinance Penetrator (MOP). And there was only one plane built to deliver that bomb: the American B-2 Spirit.

“With a single exertion of its unmatched military strength,” Ferguson and Gallant wrote, “the United States can shorten the war, prevent wider escalation, and end the principal threat to Middle Eastern stability. It can also send a signal to those other authoritarian powers who have been Iran’s enablers that American deterrence is back.”

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"Trump Keeps His Promise on Iran. The World Is Safer for It." https://t.co/W4cJn812oU

— LuigiC (@Curini) June 23, 2025

Israel had planned to strike Iranian nuclear sites as soon as next month but was waved off by President Trump in recent weeks in favor of negotiating a deal with Tehran to limit its nuclear program, according to administration officials and others briefed on the discussions.

Mr. Trump made his decision after months of internal debate over whether to pursue diplomacy or support Israel in seeking to set back Iran’s ability to build a bomb, at a time when Iran has been weakened militarily and economically.

The debate highlighted fault lines between historically hawkish American cabinet officials and other aides more skeptical that a military assault on Iran could destroy the country’s nuclear ambitions and avoid a larger war. It resulted in a rough consensus, for now, against military action, with Iran signaling a willingness to negotiate.

Israeli officials had recently developed plans to attack Iranian nuclear sites in May. They were prepared to carry them out, and at times were optimistic that the United States would sign off. The goal of the proposals, according to officials briefed on them, was to set back Tehran’s ability to develop a nuclear weapon by a year or more.

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Trump Waved Off Israeli Strike After Divisions Emerged in His Administration – The New York Times https://t.co/g52MRrZclH

— Josh Kraushaar (@JoshKraushaar) April 16, 2025