President Donald J. Trump
Donald Trump’s handling of the tariff war demonstrates serious flaws in economic management. Many Republicans believe that tax cuts and deregulation can solve all fiscal challenges, which is fundamentally misguided because effective fiscal management requires a deeper understanding of complex issues rather than simplistic solutions.
The Republican Party has, somewhat misleadingly, convinced many Americans that it has a unique ability to foster an excellent economy despite historical evidence suggesting otherwise. Even Democrats, uncertain of their strengths, often refrain from comparing the economic performance of the two parties. Instead, they focus on more familiar policy issues, such as civil rights, abortion, and other social agendas.
Like many Americans, I once believed that Republicans had a stronger track record on economic issues than Democrats. However, Trump’s unconventional economic strategy of imposing tariffs, fully endorsed by his party, compelled me to reassess the fiscal performance of both parties since 1945. What I discovered is both surprising and enlightening.
Before discussing the specifics, it is essential to consider the significant implications of Trump’s tariff policies for the U.S. economy. His approach poses serious risks and reflects a flawed understanding of economics. For years, Trump has mistakenly believed that countries, not consumers, bear the cost of tariffs on imports. This view contradicts leading economists, who clearly show that consumers ultimately pay the price, potentially inflicting lasting harm on American households and the economy.
Despite operating a mid-sized real estate business, Trump has never fully grasped the financial markets. As a New Yorker who has observed him for 41 years, witnessing everything from his ill-fated casino ventures to his political aspirations, it is clear that his limited engagement with the stock market reflects a more profound inability to comprehend its intricacies and understand the effects of tariffs on financial markets.
A tariff is a tax imposed by a government on imported goods and services. When used effectively, it can protect domestic industries by raising import prices, making them less competitive. However, as Trump has levied, indiscriminate use of tariffs can lead to higher consumer prices, reduced trade, and supply chain disruptions. While importers are generally responsible for paying these tariffs, they often pass the costs on to consumers through higher prices.
Trump proclaimed that “tariff” is the most beautiful word in the dictionary, ignoring its serious risks to the US economy. He instigated a trade war by imposing record tariffs on allies and adversaries. Notably, a 145 percent tariff on China led to a 125 percent retaliatory tariff on US goods, escalating the conflict. This reckless strategy has left the US economy facing significant challenges across various sectors, highlighting the severe consequences of such misguided policies.
Trump’s tariffs have plunged the global economy into crisis, severely impacting the US economy. The dollar and Treasury bonds, usually safe during downturns, have declined significantly. Since early April 2025, the dollar has lost over 5% against the euro and the pound, and 6% against the yen. Since Trump’s inauguration on January 20, 2025, the Dow Jones has dropped 11.9%, and the S&P 500 has fallen 15.4%, resulting in a staggering loss of approximately $11.1 trillion. Following the announcement of his tariff war, nearly $6.6 trillion of this loss occurred in just two days—April 3 and 4, 2025. The economic consequences are severe, and the US is struggling under the weight of these decisions.
Trump convinced himself that countries impacted by his tariffs would come to the White House, eager to negotiate on his terms. However, many saw through his bravado and opted not to engage, leaving no official records of any agreements. He confidently proclaimed that China, as the world’s second-largest economy, would bend to his demands. Yet, the anticipated phone call from President Xi never came. Ultimately, Trump found himself in a precarious position, as it became increasingly evident that Xi had no intention of discussing the tariffs, demonstrating a significant miscalculation in Trump’s approach to foreign diplomacy.
Trump’s bravado has faded into empty threats. In a surprising shift, he has suddenly softened his combative approach, hinting at negotiations with China, claims that China quickly denied. Meanwhile, Americans face rising living costs and harsh economic conditions, issues central to Trump’s election.
The US Economy
President Trump often squanders a growing economy
President Trump inherited a strong economy from Biden, similar to the legacy Obama passed to Trump during his first term. In Biden’s economy, the real GDP grew 5.9% during Biden’s first year in office—the fastest rate since 1984. During Biden’s first year in office, the unemployment rate fell from 6.4% in January 2021 to 3.9% by December 2021. Biden’s economy boasted historic wage gains, investments, and job growth. The Biden Inflation Reduction Act addresses various issues, including inflation, energy security, climate change, and healthcare, with a mix of tax changes, investments, and regulatory provisions.
The 2020 pandemic resulted in the loss of 22 million jobs between March and April 2020. However, with the massive influx of stimulus, which ultimately led to inflation and contributed to Biden’s departure from office, the US added 12 million jobs by December 2020. In June 2022, the US surpassed its pre-pandemic employment totals. Since then, the economy has added 7.6 million jobs, or 240,000 jobs per month, according to the US Bureau of Labor Statistics (BLS).
Guess what: Monthly job gains have averaged 125,000 since 1939. During Biden’s term, the unemployment rate hit a nearly 54-year low of 3.4% in January 2023. It is safe to conclude that Trump inherited an economy that continued to grow healthily from Biden.
Has the US economy done better under Democrats or Republicans?
For decades, Republicans, like Trump, have confidently claimed superiority over Democrats in economic management, a belief many Americans have sadly accepted. This perception is reinforced by the GOP’s appealing, business-friendly tenets, which advocate lower taxes, reduced regulations, strong support for small businesses, traditional values, and limited government intervention. These core principles form a compelling political platform that resonates with many voters.
After closely observing the responses of both political parties during the Great Recession of 2008 and the COVID-19 pandemic in 2019 and their impact on the economy during these critical moments, I embarked on a deep dive into their long-term economic performance dating back to 1945. My findings will inform and challenge your perspectives on which party has truly delivered for the economy over the decades.
My research shows that since World War II, the US economy has fared better under Democratic presidents than Republican ones. Key indicators include stronger personal income growth, higher GDP expansion, greater corporate profits, and lower unemployment rates. Additionally, budget deficits relative to the economy’s size have been lower on average during Democratic administrations, highlighting their effectiveness in promoting economic prosperity.
In August 2014, The Economist reported that real GDP growth, adjusted for inflation, averaged 1.8 percentage points higher under Democratic presidents from Truman to Obama’s first term. Economists Alan Blinder and Mark Watson noted an average growth rate of 4.3% for Democrats compared to 2.5% for Republicans during a similar period. In September 2020, CNN reported that from 1945 to the second quarter of 2020, the average GDP growth rate was 4.1% under Democratic and 2.5% under Republican administrations. Finally, The New York Times found that since 1933, the US economy has grown at an annual average rate of 4.6% under Democratic leadership, compared to 2.4% under Republican leadership, emphasizing the stronger economic performance associated with Democratic presidencies.
Historically, GDP growth and job creation have been stronger under Democratic presidencies, while recessions have been more common under Republican administrations. This underscores the effectiveness of Democratic policies in promoting economic stability.
Republican National Committee
Why have Democrats done better than Republicans on the economy?
The analysis is clear and impactful. A growing household must increase its income annually to maintain a higher standard of living; reducing or stagnating income is not an option. Similarly, cutting unnecessary expenses and boosting income simultaneously are highly desirable.
This principle also applies at the macroeconomic level. A nation with a growing population must reduce unnecessary expenditure and proactively boost its revenue year after year to avoid a detrimental balance sheet. While Democrats aim to increase revenues by addressing inequalities in the tax code and providing essential tax relief for lower-income earners, Republicans generally favor tax cuts for corporations and the wealthiest individuals without generating the corresponding revenue. This approach often leads to budget deficits, hampering the government’s ability to fund vital services and federal programs adequately.
Democrats champion strong labor protections and regulations that elevate wages, improve working conditions, and ensure workplace safety. These measures contribute to a more stable and productive workforce. Conversely, Republicans advocate for deregulation, claiming it alleviates burdens on businesses and stimulates job creation. However, the actual effectiveness of deregulation in fostering job growth remains a matter of significant debate.
Which political party is better for small businesses?
Republicans often believe that tax cuts and deregulation are the solutions to all economic problems. They tend to oppose stimulus spending, even when bold measures are necessary to prevent the economy from collapsing. After all, businesses need to exist to benefit from tax cuts and deregulation, but these benefits are of little help when the economy collapses and companies go out of business. During the Great Recession of 2008, the Republican Congress sought to address the financial turmoil with a narrow focus on tax cuts and deregulation. Ultimately, they grudgingly passed the American Recovery and Reinvestment Act (ARRA), championed by a Democratic President Obama, which allocated $787 billion to stimulate the economy, ultimately saving it.
Similarly, during the COVID-19 pandemic, the Biden administration prioritized significant investments in economic recovery and infrastructure, leading to an extraordinary 16 million new business applications from 2021 to 2023. This growth far exceeds President Trump and any prior Republican administration, emphasizing the effectiveness of Democrats’ proactive policies in fostering entrepreneurship and economic prosperity.
While Republicans tend to support small businesses mainly through tax cuts and deregulation, Democrats are more committed to fully funding the Small Business Administration’s (SBA) programs. This distinction underscores why Republican policies have not achieved the same economic benefits as those enacted by Democrats.
Republicans have historically focused on myopic tax cuts and deregulation that primarily benefit corporations and the wealthy, with no bold and consequential social programs to help the masses. Meanwhile, Democratic presidents have established social programs like Social Security, Medicare, and Medicaid. These programs have supported all Americans—Democrats, Republicans, and Independents—for over 80 years. To date, Democrats have outperformed Republicans on economic issues.
So, the next time Republicans claim they are better than Democrats on economic issues, confidently counter their assertion by stating that historical evidence disproves their argument.
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Nicholas A. Owoyemi
Moderate Voices of America (MVA)
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