Trump’s Economic Fantasy Is Nearing Collapse
By Sentiment.co.id
May 2, 2025
The narrative of a robust, unshakable U.S. economy under former President Donald Trump’s influence has been a cornerstone of his political brand. His supporters point to stock market highs, tax cuts, and deregulation as evidence of an economic golden age. Yet, beneath the surface, cracks are forming in this carefully curated image. The reality is that Trump’s economic policies, both during his presidency and as a looming influence in 2025, are built on a fragile foundation—one that is increasingly at risk of collapse. This article delves into the structural weaknesses, policy missteps, and external pressures that are pushing Trump’s economic fantasy toward a breaking point.
The Myth of the Trump Economic Miracle
Trump’s economic narrative hinges on a few key pillars: tax cuts, deregulation, and a booming stock market. During his first term (2017–2021), the Tax Cuts and Jobs Act of 2017 was touted as a game-changer, slashing corporate tax rates from 35% to 21% and promising to unleash unprecedented growth. The stock market soared, unemployment hit historic lows (3.5% in 2019), and GDP growth averaged around 2.5% annually pre-COVID. These figures have been endlessly championed by Trump and his allies as proof of his economic genius.
However, this narrative glosses over critical nuances. The tax cuts disproportionately benefited corporations and high-income earners, with limited trickle-down effects for the middle and working classes. According to the Center for American Progress, the top 1% of households received 20% of the tax cut benefits, while the bottom 60% saw minimal gains. Corporate stock buybacks surged to $1 trillion in 2018, but wage growth remained sluggish, averaging just 3% annually despite tight labor markets. The promised surge in business investment never fully materialized, as corporations hoarded cash or paid down debt rather than expanding operations.
Deregulation, another Trump hallmark, was sold as a way to unshackle businesses from bureaucratic red tape. While it reduced compliance costs in industries like energy and finance, it also weakened environmental protections and financial safeguards. The rollback of Dodd-Frank regulations, for instance, loosened oversight of mid-sized banks, raising concerns about systemic risks reminiscent of the 2008 financial crisis. Meanwhile, GDP growth under Trump was solid but not exceptional—lower than the 3.9% average during Bill Clinton’s presidency and barely above Barack Obama’s post-recession recovery.
The Debt and Deficit Time Bomb
One of the most glaring vulnerabilities in Trump’s economic legacy is the explosion of federal debt and deficits. The 2017 tax cuts, combined with increased defense spending and minimal entitlement reform, ballooned the federal deficit to $984 billion in 2019—before the COVID-19 pandemic necessitated trillions in emergency spending. By the end of Trump’s first term, the national debt had risen by $7.8 trillion, reaching $27.7 trillion, according to the U.S. Treasury Department.
Fast forward to 2025, and the debt trajectory remains alarming. The Congressional Budget Office (CBO) projects that the national debt will hit $41 trillion by 2028 if current policies persist. Trump’s promises of further tax cuts and infrastructure spending, without clear plans to offset revenue losses, threaten to exacerbate this crisis. Interest payments on the debt are already projected to surpass defense spending by 2027, crowding out investments in education, healthcare, and innovation.
The irony is stark: Trump’s economic rhetoric emphasizes strength and self-reliance, yet his policies have left the U.S. increasingly dependent on borrowing, much of it from foreign creditors like China and Japan. A sudden spike in interest rates or a loss of confidence in U.S. debt could trigger a fiscal crisis, undermining the very prosperity Trump claims to champion.
Trade Wars and Global Isolation
Trump’s “America First” trade policies, marked by tariffs and confrontational rhetoric, were framed as a defense of U.S. workers. His administration imposed tariffs on $550 billion worth of Chinese goods, as well as steel and aluminum imports from allies like Canada and the EU. While these measures aimed to revive domestic manufacturing, their results were mixed at best.
The Economic Policy Institute estimates that Trump’s tariffs created 142,000 jobs in protected industries like steel but led to 450,000 job losses in downstream sectors due to higher input costs. American consumers bore the brunt, with tariffs raising household costs by an estimated $1,300 annually, according to the National Bureau of Economic Research. The U.S. trade deficit, which Trump vowed to eliminate, grew to $679 billion in 2020, as imports outpaced exports.
In 2025, the global economic landscape is even less forgiving. China’s pivot to self-reliance in semiconductors and green energy has reduced its dependence on U.S. markets, while Europe grapples with energy crises and geopolitical tensions. Trump’s threats of new tariffs, including a proposed 10% universal tariff on all imports, risk reigniting trade wars that could disrupt supply chains and fuel inflation. With global growth slowing—IMF forecasts peg 2025 global GDP growth at 3.1%—the U.S. cannot afford to alienate trading partners or destabilize markets.
The Stock Market Mirage
The stock market’s performance has been a centerpiece of Trump’s economic narrative, with the S&P 500 gaining 68% during his first term (pre-COVID). In 2025, as Trump’s influence looms large, his supporters continue to point to Wall Street’s resilience as evidence of economic strength. But this is a mirage.
Stock market gains have been driven by a handful of tech giants—Apple, Microsoft, Nvidia—whose valuations are increasingly detached from broader economic fundamentals. The Shiller P/E ratio, a measure of market valuation, stands at 38 in early 2025, near historic highs and signaling potential overvaluation. Meanwhile, small-cap stocks and industries like retail and manufacturing lag, reflecting uneven growth.
Monetary policy adds another layer of risk. The Federal Reserve’s efforts to tame inflation, which hit 9.1% in 2022 and remains stubborn at 3.5% in 2025, have led to higher interest rates. This tightens credit conditions, squeezes corporate profits, and threatens asset bubbles. A market correction, long warned about by economists like Nouriel Roubini, could wipe out trillions in wealth and expose the fragility of Trump’s economic claims.
The Working-Class Disconnect
Perhaps the most damning critique of Trump’s economic fantasy is its disconnect from the lived experiences of working-class Americans. Despite low unemployment, real wages have barely kept pace with inflation. The Economic Policy Institute reports that median hourly wages grew just 1.2% annually from 2017 to 2020, while housing costs soared by 20% and healthcare expenses rose 15%. In 2025, these pressures persist, with rent and childcare costs outpacing income growth.
Trump’s rhetoric about bringing back manufacturing jobs has also fallen short. While some sectors, like automotive, saw modest gains, the broader trend of automation and globalization continues unabated. The Bureau of Labor Statistics projects that manufacturing employment will decline by 400,000 jobs between 2020 and 2030. Meanwhile, income inequality has worsened, with the top 10% of earners capturing 50% of national income in 2024, per the World Inequality Database.
External Shocks and Political Polarization
Trump’s economic fantasy is not collapsing in a vacuum. External shocks, from geopolitical conflicts to climate-driven disruptions, are straining the U.S. economy. The ongoing Russia-Ukraine conflict and tensions in the Taiwan Strait threaten energy and semiconductor supply chains. Climate events—hurricanes, wildfires, and droughts—are costing billions annually, with FEMA’s disaster relief fund projected to run dry by 2026.
Domestically, political polarization exacerbates economic uncertainty. Trump’s influence over the Republican Party and his potential 2024 campaign (or its aftermath) have deepened gridlock in Washington. The debt ceiling showdowns of 2023 and early 2025 raised fears of default, spooking markets and undermining investor confidence. Without bipartisan cooperation, addressing structural issues like Social Security solvency or infrastructure decay becomes nearly impossible.
The Path Forward
The collapse of Trump’s economic fantasy is not inevitable, but avoiding it requires a reckoning with reality. Policymakers must prioritize fiscal discipline, balancing tax cuts with revenue measures like closing loopholes or taxing wealth. Trade policies should focus on strategic partnerships rather than blanket tariffs, fostering resilience in global supply chains. Investments in education, green energy, and workforce training can address inequality and prepare workers for a changing economy.
For Trump and his supporters, the challenge is to move beyond simplistic narratives of economic triumph. The U.S. economy is not a monolith—it is a complex system shaped by global forces, technological shifts, and domestic choices. Ignoring these realities in favor of populist slogans risks not just economic stagnation but a deeper crisis of confidence.
Conclusion
Trump’s economic fantasy—built on tax cuts, deregulation, and a booming stock market—has captivated millions but rests on shaky ground. Rising debt, trade missteps, and disconnects from working-class realities threaten to unravel the narrative. As external shocks and political dysfunction mount, the bubble of unreality is nearing its bursting point. The question is not whether the fantasy will collapse, but how severe the fallout will be—and whether the U.S. can chart a more sustainable path forward.
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