Trump's economic agenda report card is mixed! Growth and investment are strong, but trade deficits are difficult to resolve, and the return of manufacturing has fallen short of expectations
The Zhitong Finance App learned that a study by the German Institute for Economic Research (IW) shows that although US President Trump's economic agenda has driven steady economic growth and strong investment, it has failed to reduce the trade deficit. The Trump administration is trying to reshape the US economic structure, reverse long-term trade imbalances, and reduce America's dependence on overseas supply chains through measures such as reducing taxes, imposing tariffs, attracting corporate investment, and promoting the return of manufacturing. However, judging from current economic performance, the actual effects of these policies are still clearly divided.
The report points out that Trump's tax cuts, tariff measures, and efforts to push the manufacturing industry back to the US have had mixed results. The US gross domestic product (GDP) has maintained steady growth, and investment related to artificial intelligence (AI) has also shown strong performance, but the pace of job creation lags behind the previous administration, and the inflation rate is still higher than the Federal Reserve's 2% target.
The report also stated that despite the implementation of extensive import tariffs, the US merchandise trade deficit reached 130 billion US dollars in August, which is higher than the level of two years ago. However, the trade landscape has changed. The EU's share of the US trade deficit fell to 7% from 20% in August 2024, while China's share of the US trade deficit fell from 29% to 14%. Efforts to push manufacturing back into the US have so far fallen short of expectations. In 2025, US foreign direct investment inflows fell 8.2% to US$248 billion, 18% lower than the average from 2015 to 2024. Furthermore, the war waged by the US and Israel against Iran is increasing America's already high public debt and driving up interest rates. Creditors are beginning to question the ability of the US to maintain its $40 trillion outstanding debt.
Tariff policies reshaped trade patterns, but failed to reverse overall trade imbalances
Using tariffs as one of the core tools of his economic agenda, Trump is trying to protect the US industry by raising the cost of imported goods, induce companies to shift production links to the US, and force trading partners to readjust trade relationships with the US. The policy idea is to use tariffs to raise the cost of overseas production and exports to the US, thereby enhancing the competitiveness of the local US manufacturing industry, and at the same time using US market access as a bargaining chip to push trading partners to make concessions.
Under this policy framework, the Trump administration expanded the scope of tariff measures and combined tariffs with national security, supply chain security, and industrial policies. In addition to implementing tariff measures against different trading partners, the US government has also included strategic industries such as semiconductors in the scope of priority attention in an attempt to promote related industrial chains to establish production capacity within the US through import restrictions and tariff arrangements.
For example, the Trump administration announced in January 2026 that it would impose 25% tariffs on some advanced computing chips and related products, but at the same time set up exemptions for imported products used in US data centers, R&D activities, and other products that help strengthen the local US technology supply chain. This policy reflects the US government's attempt to balance restricting some imports, supporting local manufacturing capacity, and meeting the needs of the domestic technology industry.
However, the tariff policy will not necessarily lead to a narrowing of America's overall trade deficit. On the one hand, enterprises may transfer procurement and production to other countries by adjusting the supply chain, rather than directly moving the manufacturing process back to the US; on the other hand, the US still has a large demand for overseas goods and intermediate products, especially in areas where the country does not yet have sufficient production capacity. Therefore, even if imports from specific countries or regions fall, the US may switch to imports from other economies. The source of the trade deficit changes accordingly, but the overall size does not necessarily decline at the same time.
At the same time, tariffs may also drive up corporate procurement costs. For US manufacturers that rely on imported raw materials, components, and equipment, tariffs increase production input costs. Companies may pass on part of the costs to consumers by increasing product sales prices, and may also reduce profit margins or delay investment plans. If companies are unable to determine future tariff levels and trade policy trends, they may also delay long-term capital expenditure and supply chain adjustment decisions.
Despite extensive import tariffs, the US merchandise trade deficit reached 130 billion US dollars in August, higher than the level of two years ago. However, the trade landscape has changed. The EU's share of the US trade deficit fell to 7% from 20% in August 2024, while China's share of the US trade deficit fell from 29% to 14%. This shows that tariff measures have indeed changed the structure of US trade sources, but they have yet to eliminate the overall imbalance in US merchandise trade.
The manufacturing return policy continues to advance, but investment promises have not been fully translated into actual production capacity
Promoting the return of manufacturing is another important pillar of Trump's economic agenda. The Trump administration believes that globalization and industrial exodus over the past few decades have weakened America's manufacturing base, making the US overly dependent on overseas production for key products and supply chain links. Therefore, the government hopes to use tariff protection, tax incentives, investment negotiations, and industrial support to attract enterprises to build new factories in the US, expand production scale, and move some of the production links originally located overseas back to the US.
In terms of specific measures, on the one hand, the Trump administration uses tariffs to raise the cost of enterprises to produce overseas and then export to the US to force companies to re-evaluate production layouts; on the other hand, it seeks more capital to flow into the US manufacturing, technology, and infrastructure sectors through investment arrangements with large multinational enterprises and foreign governments.
The semiconductor industry is one of the highlights of this strategy. The US government hopes to use policy support and investment commitments to expand local chip manufacturing and related supply chain capabilities. TSMC previously announced that it will invest up to 165 billion US dollars in the US, involving projects such as chip manufacturing plants, advanced packaging facilities, and R&D centers. In addition, Apple also announced a plan to invest 600 billion US dollars in the US over the next four years. One of the goals is to strengthen the silicon supply chain in the US. General Electric, on the other hand, promised to invest about 3 billion US dollars to shift part of its production layout from China and Mexico to the US.
These investment plans reflect that the US government is trying to rebuild the local manufacturing ecosystem through corporate capital expenditure and foreign direct investment. However, there is a clear difference between investment commitments and actual capital inflows, plant construction, and additional production capacity. The scale of investment announced by some companies may include previously announced projects, routine operating expenses, or long-term plans that have not been implemented, which does not mean that all capital will be immediately invested in the US.
Furthermore, manufacturing projects usually take years from investment decisions to factory completion and commissioning. Businesses must also comprehensively consider factors such as labor costs, energy supply, infrastructure conditions, raw material prices, and future policy stability. If tariff policies are adjusted frequently, it may be difficult for enterprises to accurately assess long-term return on investment; instead, they will delay plans to build plants and expand production.
The US manufacturing industry also faces realistic cost constraints. Compared with some overseas production bases, US labor costs are higher, and tariffs push up the prices of imported parts and raw materials, which may also increase the cost of production in the US. For companies that need to rely on global supply chains, tariff protection alone may not be enough to offset the cost disadvantage of domestic production in the US.
Therefore, promoting the return of manufacturing is not simply moving overseas factories back to the US; it requires simultaneous construction of supporting supply chains, training skilled labor, improving infrastructure, and ensuring that enterprises can obtain stable policy expectations over a long period of time. Even if companies have announced investment plans, new plants may not translate into job growth and a significant increase in manufacturing output in the short term.
Efforts to push manufacturing back into the US have so far fallen short of expectations. In 2025, US foreign direct investment inflows fell 8.2% to US$248 billion, 18% lower than the average from 2015 to 2024. This means that although the Trump administration is actively promoting investment promises from large enterprises and trying to attract capital return through tariffs and policy incentives, actual foreign capital inflows have not increased at the same time.
Changes in trade structure and US fiscal pressure are further testing the long-term effects of the economic agenda
From a broader economic perspective, the Trump administration's policies also face complex relationships between trade structures, corporate investment, and fiscal conditions. The US commodity trade deficit has long been affected by multiple factors such as domestic consumer demand, savings and investment structures, the US dollar exchange rate, and the division of labor in the global supply chain. Tariffs can change the price and origin of imported goods, but it is difficult to address the underlying factors that determine overall trade imbalances alone.
At the same time, there is also some policy tension between tariffs and manufacturing return policies. The government hopes to encourage companies to produce in the US by increasing import costs, but if the prices of imported parts, equipment, and raw materials rise at the same time, the cost for enterprises to build local factories may also increase. Coupled with the uncertainty of policy adjustments, some companies may choose to move production to other low-cost countries rather than directly back to the US.
The war launched by the US and Israel against Iran is increasing America's already high public debt and driving up interest rates. Creditors are beginning to question the ability of the US to maintain its $40 trillion outstanding debt.
Higher interest rates mean that the US government may face higher interest expenses when financing new debt and refinancing existing debt. At the same time, corporate financing costs and residents' borrowing costs may also be affected, putting pressure on manufacturing investment, the real estate market, and consumer demand. If the fiscal deficit continues to widen, market concerns about the sustainability of US debt may further affect treasury bond yields and financial market risk pricing.
Overall, the Trump administration is trying to push the US economy from relying on global supply chains to paying more attention to local production and industrial safety through tariffs, tax cuts, and manufacturing return policies. At this stage, these policies have had an impact on the US trade source structure and corporate investment layout, and AI-related investments have also provided support for economic growth. However, trade deficits are still high, inflows of foreign capital have declined, the return of manufacturing has yet to be fully transformed into additional production capacity and employment, while high public debt and interest rate pressure have increased macroeconomic uncertainty.
This means that to evaluate the actual effectiveness of Trump's economic agenda, we must not only look at the scale of tariffs or investment promises announced by companies; we also need to observe whether US manufacturing employment, actual capital expenditure, industrial output, foreign capital inflows, and overall trade deficit can continue to improve. Whether these indicators can substantially change over the next period will determine whether the Trump administration's policy goals of promoting the revival of the US manufacturing industry and reshaping the trade pattern can actually be implemented.