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President Trump won reelection on a promise to bring economic growth back to its prepandemic highs from his first term. The centerpiece of his plan was to levy higher tariffs on imported goods, thereby cutting the trade deficit, boosting U.S. manufacturing, and collecting higher revenues.

In April, Mr. Trump sent the stock market into a temporary nosedive when he announced sweeping tariffs on nearly all countries, particularly penalizing nations that ran trade surpluses with the U.S. Before these 鈥淟iberation Day鈥� tariffs, which were almost immediately paused to allow for negotiations, the administration had raised levies on China, as well as on Mexico and Canada, which are among America鈥檚 largest trading partners. Subsequent deals have led to lower tariff rates for many countries, while importers have successfully sought exemptions. Still, the effective tariff rate on imported goods now averages 11.2%, up from 2.5%, according to the Tax Foundation.

Economists say uncertainty over tariffs has been a drag on the economy, with annual growth projected to come in near 2% for the 2025 calendar year. But, so far, predictions that Mr. Trump鈥檚 tariffs would drive up inflation and send the economy into recession have not been borne out. Prices of imported goods have risen, but inflation, while above the Federal Reserve鈥檚 target level, hasn鈥檛 spiked. Still, the full impact may just be delayed: Many companies built up pretariff inventories, and gyrating tariff rates make it tricky for retailers to set prices.

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At the same time, there鈥檚 no sign of a manufacturing renaissance 鈥� indeed, manufacturing employment has fallen, not risen, under Mr. Trump. Some companies have announced plans to build or expand U.S. factories, but construction can take years and in some cases might never happen.

What is certain is that tariffs are raising more revenue: The U.S. collected $195 billion in the fiscal year that ended Sept. 30, more than double the previous year. Based on current tariff rates, revenue could hit $247 billion in 2026, while the trade deficit has narrowed to a five-year low. But if imports fall further, because of either high prices or the reshoring of manufacturing, that would result in lower tariff revenue. The Supreme Court could also upend things with a ruling on the legality of Mr. Trump鈥檚 tariffs.

The stock market has been strong overall, and home prices also remain high 鈥� buoying homeowners, but keeping other Americans out of the housing market. Only 21% of homebuyers in 2025 were first-time buyers, a record low in tracking that goes back to 1981. Expect to hear more about affordability in the coming year.

Read our other stories on President Trump鈥檚 second term after one year:

鈥⑻�In one year, Trump has shaken up everything. With what effect?
鈥⑻�Shattering foreign policy norms
鈥⑻�Battling universities over antisemitism and DEI听

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