Fact Check: America's economy is thriving despite the impact of tariffs.

Fact Check: "America's economy is thriving despite the impact of tariffs."

What We Know

The claim that America's economy is thriving despite the impact of tariffs is contradicted by multiple analyses and reports. According to a study by The Budget Lab at Yale, the average effective tariff rate in the U.S. has reached 15.8%, the highest since 1936. This increase in tariffs has led to a projected short-run price level increase of 1.5%, equating to an average household income loss of approximately $2,000 in 2025. Furthermore, the report indicates that U.S. real GDP growth is expected to decline by 0.6 percentage points in 2025 due to these tariffs, with long-term effects suggesting a persistent reduction in GDP of about 0.3%, translating to an annual loss of $100 billion.

Additionally, the Economic Effects of President Trump's Tariffs report projects that tariffs will reduce long-run GDP by around 6% and wages by approximately 5%. This indicates that households, particularly middle-income families, could face significant lifetime losses, estimated at $22,000.

Moreover, recent analyses by Goldman Sachs suggest that companies are likely to pass on 70% of the direct costs of tariffs to consumers, further exacerbating the economic burden on households.

Analysis

The evidence presented from multiple sources paints a clear picture that contradicts the claim of a thriving economy. The Budget Lab provides a comprehensive analysis of the tariff impacts, highlighting significant economic contractions and household income losses. The credibility of this source is bolstered by its academic affiliation with Yale, which lends it authority in economic research.

The Economic Effects of President Trump's Tariffs report, produced by the Penn Wharton Budget Model, also offers a rigorous economic analysis. This source is reliable, as it is based on well-established economic models and methodologies. The findings that tariffs will lead to substantial GDP and wage reductions are echoed in other reputable analyses, including those from BBC and J.P. Morgan Research, which also note negative impacts on economic growth and consumer spending.

In contrast, while some proponents of tariffs argue that they can lead to increased revenue and protection for domestic industries, the broader economic implications suggest that these benefits are outweighed by the costs to consumers and overall economic growth. The Tax Foundation notes that while tariffs can raise federal revenues, they also impose significant economic distortions that ultimately harm households.

Conclusion

The claim that America's economy is thriving despite the impact of tariffs is False. The evidence overwhelmingly indicates that tariffs have led to increased prices for consumers, reduced GDP growth, and significant income losses for households. The economic data and analyses suggest that the negative effects of tariffs far outweigh any potential benefits, leading to a contraction in economic prosperity rather than a thriving economy.