One yr of Trump: How the US financial system has developed | EUROtoday

As of: January 20, 2026 8:20 a.m

Falling costs, robust development, extra jobs or a falling commerce deficit: Donald Trump made many guarantees at his inauguration. Could he maintain her?

“The golden age for America begins right now.” Donald Trump promised nothing lower than this for the American financial system precisely a yr in the past, after he had simply been sworn in because the forty seventh President of the USA. If you take a look at the event of the US inventory markets since January 20, 2025, you would possibly assume that he was proper.

During this era, the main index Dow Jones climbed by over 14 %, the market-wide S&P 500 by virtually 17 % and the expertise index Nasdaq 100 by greater than 21 %. But do the US inventory markets truly characterize the American financial system?

Growth pushed primarily by the AI ​​growth

“If we look at developments on Wall Street, we see that the indices are primarily driven by the large AI technology companies,” says Stefan Riße, capital market strategist at asset administration Acatis. That’s simply part of the US financial system, but it surely has plenty of dominance on the inventory market. “The real economy has not yet benefited that much.”

“Trump is incredibly lucky that the tech industry around artificial intelligence is experiencing such a boom and that he has the world’s leading corporations in his economy,” says David Kohl, chief economist at Bank Julius Baer. In the third quarter, gross home product (GDP) elevated by 4.3 % on an annual foundation. The US financial system has not grown this strongly for the reason that summer time of 2023 – primarily because of billions of {dollars} in investments in information facilities.

But particularly with regard to AI, it’s questionable how sustainable the expansion is for the US financial system and whether or not it’ll even be mirrored in constructive improvement for corporations and employment, says Laura von Daniels from the Science and Politics Foundation (SWP). “There is a question mark behind it – simply because we have increasing automation and the use of artificial intelligence in the labor market.”

“Not a mature strategy”

According to Trump’s personal assertion, the purpose of Trump’s financial coverage round tariffs, deregulation and tax cuts is to guard home trade, improve manufacturing by US corporations and thus create jobs. “What Trump needs for this is investments in his own country,” explains von Daniels.

In negotiations with buying and selling companions, he obtained concessions that they needed to put money into the US market. “But that says nothing about what investment activity in the USA will actually look like in the next few years,” says the knowledgeable. In addition, the general financial impact is questionable. “We see pressure being exerted on other countries, but he has not yet presented a mature economic or industrial policy strategy,” stated von Daniels.

In any case, Trump’s guarantees haven’t but been obtained on the job market. In November, the unemployment fee climbed to a four-year excessive of 4.6 %. The manufacturing sector is especially weak. According to the U.S. Labor Market Authority, 8,000 industrial jobs have been eradicated in December alone. “Here too, Trump does not present any concepts as to how he would like to maintain or increase employment in the USA,” says von Daniels. An instance of that is the Taiwanese chip producer TSMC. “They invest in the US market and want to produce chips there, but due to a lack of sufficiently qualified workers, they bring their own experts, their own skilled workers.”

Trumps Approval rankings sink

The defining theme of Trump’s marketing campaign was inflation. He received the election partly as a result of he complained concerning the excessive costs and blamed the Democratic Party round Joe Biden and Kamala Harris for them. The image has now been reversed. Inflation has remained secure just lately: year-on-year, shopper costs rose by 2.7 % in December, as within the earlier month. The downside for Trump is, above all, the excessive value of residing within the USA – equivalent to housing and meals.

They just lately gave the Democrats electoral victories in a number of states. Because Trump had promised to decrease costs “very, very quickly” and “make America affordable again.” Nevertheless, the worth stage is round 25 % above the extent earlier than the Corona disaster. Various on a regular basis items equivalent to eggs, espresso, steaks and orange juice have change into symbols of the so-called affordability disaster. Although wages have risen sharply throughout this time, persons are typically far more conscious of worth will increase.

According to a Reuters/Ipsos survey, approval of Trump’s financial insurance policies amongst all US residents has now fallen to 33 %, the bottom stage since he took workplace. “For me, this is also an indicator that people have a good sense that Trump wants to sell them something that is expected to have relatively little real impact,” stated von Daniels.

Tariffs imply greater costs for shoppers

It is quite questionable that the prices for US residents will fall sooner or later – quite the opposite. The motive: The import tariffs launched by Trump, that are meant to stimulate demand within the USA and burden international exporters, might additional improve costs. Only round 4 % of the tariff burden has thus far been borne by international corporations, whereas 96 % was handed on to US patrons, as a present research by the Kiel Institute for the World Economy (IfW) reveals.

“The tariffs are an own goal,” says analysis director Julian Hinz. “The claim that foreign states bear these tariffs is a myth.” The tariffs made imported items costlier like a consumption tax. “Initially, these negative effects of tariffs were somewhat mitigated by two factors: one is inventory at low prices,” says SWP knowledgeable Daniels. Old items have been nonetheless being offered off. The second issue is international exporters, who, in distinction to Trump’s first time period in workplace, are now not keen to decrease their costs and cut back earnings.

Worries about additional National debt

However, Trump was capable of obtain two objectives with the tariffs: On the one hand, the commerce deficit shrank to round $30 billion, the bottom stage since 2009. And then again, in response to the White House, the United States recorded round $200 billion in customs income final yr. Trump desires to make use of this to finance his “Big Beautiful Bill” tax reform.

According to the British asset supervisor Insight Investment, customs income is just about half sufficient to cowl the prices of the large fiscal program. Despite cuts in well being and social applications, consultants anticipate debt to rise. The financial savings from the cuts are unlikely to compensate for the shortfall in income from the tax cuts within the invoice.

The US nationwide debt has already exceeded the $38 trillion mark for the primary time. “The fact that the US national debt ratio is currently more than 123 percent, measured as a percentage of gross domestic product, remains worrying,” says von Daniels. The continued “exorbitant privilege” of an important financial system and the greenback nonetheless entice investments. Whether it’ll keep that means sooner or later is determined by whether or not Trump continues his assaults on the Federal Reserve (Fed) as an unbiased central financial institution.

With data from Claudia Wehrle, ARD monetary editorial staff.