Trump administration's economic policies struggle as midterms approach

US President Donald Trump's economic policies continue to come under pressure due to inflation, rising public spending, and record levels of debt. While growth and artificial intelligence investments continue ahead of the upcoming midterm elections, tariffs and energy costs are increasing the burden on voters.

Tariffs and Energy Costs

While new tariffs applied to Canada bring retaliatory steps along with them, updated taxes are calculated to bring an additional cost of approximately 1,100 dollars annually to US households.

Affected by tensions with Iran, global fuel prices continue to remain high. The gallon price of gasoline in the US stays above 4 dollars, while transportation and travel costs are also rising.

Inflation and Growth Dynamics

Prices in the US increased by 3.7 percent annually in July. This rate clearly reveals that inflation continues to remain above the US Federal Reserve's target.

While inflation concerns persist, growth continues in the US economy. While a recovery is seen in the manufacturing sector, artificial intelligence investments contribute to record levels in financial markets.

Monetary Policy and Fed Discussions

While the Fed postpones interest rate hikes for now due to inflation concerns, President Donald Trump demands that the central bank make rapid interest rate cuts.

It is argued that low interest rates will cheapen both the borrowing costs of households and companies and the borrowing of the federal government.

Public Debt and Budget Deficit

The US national debt has exceeded 40 trillion dollars. Despite promises to reduce spending, debts have become one of the federal government's largest expenditure items.

Treasury Secretary Scott Bessent stated that the target of reducing the budget deficit to 3 percent of economic output is maintained and that a fiscal consolidation roadmap will be followed to limit spending.