Testifying to Congress, United States Trade Representative Jamieson Greer argued that “President Trump’s trade policy is working.” The data present a different picture: President Trump’s trade agenda is actually holding back the economy.
If we want to truly “become an economy based on producing real goods and services,” as Greer told Congress, ending the trade war for US manufacturers needs to be the highest priority.
The outlook for the manufacturing sector — that part of the economy that tariffs were supposed to help — is bleak. Manufacturers continue to shed jobs (down 88,000 year-over-year) while productivity collapsed in the fourth quarter of last year, the opposite of what we would expect if tariffs were boosting productivity, as Greer alleges.
And it’s factory owners themselves who are telling us this story. Manufacturing sentiment, a measure of how manufacturers feel about the growth prospects of their sector, remained negative for most of 2025. In fact, The Economist reported that manufacturers overwhelmingly reported negative sentiments when tariffs were mentioned, with no respondents reporting positive views. There’s little to suggest the manufacturing sector is clamoring for more tariffs.
Notably, the administration seems to be focusing on production instead of prices, likely because the data show that tariffs are raising costs for consumers and businesses. Research from the Federal Reserve Bank of New York and other academics suggests that importers have borne about 90% of the tariffs, with about a quarter of that being passed onto final retail prices shoppers pay. This will continue to worsen if the tariffs stay in place.
When businesses have to pay more for their manufacturing inputs, and consumers have to pay higher prices for imported goods or purchase higher-priced domestic alternatives, the economy slows. This is felt beyond just factories. More spending on tariffed goods means less spending elsewhere, like on services, causing those other sectors to shrink. Tax Foundation modeling shows that tariffs in the long run will actually reduce GDP and lead to a smaller economy overall than if the tariffs had never been imposed.
Though it will take years to fully comprehend the magnitude of the effects the first year of Trump’s trade war had on the US economy, the topline estimates for 2025 do not indicate that tariffs boosted overall growth in the short run. Real GDP for 2025 grew by 2.1% from the annual level, lower than the 2.8% growth in 2024 from the annual level. This is roughly in line with what the CBO projected prior to the new tariff regime.
To be fair, tariffs are only a portion of the economy, and other forces — like the government shutdown — took a toll on growth. But if we look at real final sales to domestic purchasers, a measure that is not confounded by reductions in government spending, we can see real final sales declining steadily in 2025. We can’t say definitively that this decline is due to the president’s tariff policies, but if the tariffs were strengthening the economy, we would expect the opposite trend.
Greer cites the president’s trade and investment deals with various countries as evidence that the tariffs have allowed the US to extract significant concessions from its trading partners. But the deals that have been announced are at best frameworks for future negotiations, including pledges to expand market access or invest in the US, with no enforcement mechanism. Not one of the deals has been ratified by any of the legislatures in any of the negotiating countries, including the US.
Even just looking at the data for 2025, we see little evidence of an investment spike from the tariffs. Foreign direct investment was lower in 2025 than in the previous four years. And most of that FDI was reinvested earnings, rather than new investment.
If the tariffs remain in place, over time, we would expect to see some shifts in supply chains to the US. But that would not be a costless adjustment. It would involve raising prices significantly for businesses and consumers, while also damaging US credibility with our trading partners.
Greer told Congress we are in “a moment of drastic, overdue change.” He’s right: the economy is changing, with the AI boom and other emerging technologies creating new markets for countries to dominate. Yet the president is pursuing a trade agenda that treats the country like it’s 1926, not 2026. America should be pursuing policies that ease the burden on US manufacturers to become the dominant force in this race, not increase it.
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