Under the second presidency of Donald Trump, the federal government of the United States has pursued an economic policy focused on lower taxation, deregulation, and large-scale protective tariffs. Trump nominated Howard Lutnick as the United States Secretary of Commerce, Scott Bessent as the United States Secretary of the Treasury, and Russell Vought as the director of the Office of Management and Budget (OMB), all of whom were confirmed by the U.S. Senate. When Donald Trump took office as president in January 2025, the economy of the United States had increasing economic growth, low unemployment, and declining inflation in the aftermath of the 2021–2023 inflation surge.
To cut the United States's federal budget, Trump established the Department of Government Efficiency (DOGE), led by Elon Musk. DOGE employees have vastly cut spending at various federal agencies, and have attempted to dismantle nearly all of the functions of the United States Agency for International Development and the Consumer Financial Protection Bureau. In January 2025, the OMB briefly issued a pause to all grants and loans from the federal government.
Much of Trump's domestic economic agenda has centered around the extension of the Tax Cuts and Jobs Act of 2017, which was passed during his first presidential term. Trump has also pledged to remove taxes on tips, overtime pay, and Social Security benefits, though all of his proposals face resistance from Congress, with the tax cuts likely to increase the U.S. national debt by trillions of dollars if not offset by politically unpopular cuts to spending. He sought greater government control over private businesses, abandoning traditional conservative free market orthodoxy in favor of state capitalism by taking direct government equity stakes in major US corporations. Trump also imposed steep protectionist tariffs against nearly every country in an effort to correct U.S. trade deficits and promote manufacturing in the U.S., significantly escalating the China–U.S. trade war and beginning trade wars with Canada and Mexico. The reaction to Trump's tariffs, including his April 2025 decision to impose a universal 10 percent tariff on nearly all countries and higher rates on many other countries, led to a stock market crash. His economic policies and frequent tariff announcements and pauses led to market volatility and the emergence of a "Sell America" investment trend.
Trump has been described as trying "to achieve most of his policy goals through threats and attacks, not a meaningful dialogue on policy with Congress". His immigration policies, broad tariffs, and the fuel crisis from the 2026 Iran war caused by Trump have all contributed to a significant slowdown of the US economy.
Background and campaign
Donald Trump, previously the president of the United States from 2017 to 2021, campaigned in 2024 on the promise of an economic nationalist system characterized by protective tariffs, lower taxation, and reduced regulations, where income tax would be largely or completely replaced by tariffs on other countries to defend local manufacturing. In his first presidency, Trump had also focused on protectionism. In 2024, he vowed to enact even higher tariffs than those imposed in his first term, including a universal baseline tariff of 10 to 20 percent, and high tariffs on China, Mexico, and all cars imported to the United States. He proposed a four-year transition away from essential goods imported from China and sought to transform the U.S. into a self-sufficient economy. Trump pledged to extend and expand the 2017 tax cuts passed during his first term, and promised to remove taxes on tips, overtime, and Social Security benefits. Trump also pledged to devalue the U.S. dollar to cheapen American exports.
Trump campaigned against the 2021–2023 inflation surge that followed the COVID-19 pandemic in the United States, for which he blamed his successor, President Joe Biden. Trump's victory in the 2024 U.S. presidential election was attributed in part to voters' dissatisfaction with the Biden administration's handling of inflation. Many economists criticized the Trump campaign's economic agenda for potentially leading to an increase in inflation and the addition of around to the United States's national debt. Ahead of Trump's inauguration on January 20, 2025, the economy of the United States had increasing economic growth, low unemployment, and declining inflation by statistics.
Personnel
In November 2024, as president-elect, Trump nominated several officials to serve in his cabinet during his second presidency. He nominated Howard Lutnick as the United States Secretary of Commerce, Scott Bessent as the United States Secretary of the Treasury, and Russell Vought as the director of the Office of Management and Budget (OMB).
On January 16, 2025, Bessent appeared before the Senate Committee on Finance and defended Trump's tariff strategy and said he favored extensions on tax cuts and harsher economic policies against China and Russia. The U.S. Senate voted 68–29 to confirm Bessent as treasury secretary on January 27. The Senate Committee on the Budget approved Vought's nomination on January 30 in an 11–0 vote that was boycotted by all nine Democratic Party members and the one independent on the committee. The full Senate voted 53–47 on February 6 to confirm him as the OMB director. On February 18, the Senate voted 51–45 to confirm Lutnick as the commerce secretary, and he was sworn in to the role three days later, on February 21.
Trump has worked to oust Erika McEntarfer and Lisa Cook.
Budget and spending
Trump established the Department of Government Efficiency (DOGE), an initiative tasked with cutting federal government spending. DOGE is de facto led by businessman Elon Musk, who officially serves as senior advisor to the president. DOGE members have filled influential roles at federal agencies and sought to vastly cut their spending, facilitating mass layoffs of federal government employees and the dismantling of federal agencies. Layoffs primarily focused on probationary employees, with nearly 10,000 federal employees fired by February 2025. Musk initially said that DOGE would cut $2 trillion from the United States federal budget, which he first revised to $1 trillion, and later to $150 billion. DOGE said in April 2025 that it had saved $160 billion; an analysis has suggested that its cuts and firings have cost $135 billion, and evidence has emerged of errors in DOGE's accounting that incorrectly inflates the amount of money it has saved.
Trump and DOGE have attempted to dismantle the vast majority of the United States Agency for International Development (USAID). USAID, which employed around 10,000 people, was originally tasked to carry out and monitor worldwide humanitarian projects, though some have criticized it for contributing to projects that are not humanitarian in nature and for mismanaging its funding. Vought was also made the acting director of the Consumer Financial Protection Bureau (CFPB) upon becoming OMB director, and he worked to shut down much of the CFPB's operations. In February 2025, Trump directed the treasury secretary to end production of the U.S. penny.
Trump appointed allies of him and Musk to the United States Office of Personnel Management (OPM) and the General Services Administration (GSA) to facilitate planned spending cuts. In January 2025, the OPM offered employees of the federal government a deferred resignation program in which they could receive their salary and benefits through September 2025 if they resigned before February 6. Musk and DOGE gained access to the payment system of the U.S. Department of the Treasury. Opposition to DOGE has resulted in numerous lawsuits challenging the legality and constitutionality of its actions.
Federal government grant pause
On January 27, 2025, the OMB issued a temporary pause to all grants and loans from the federal government to 2,600 programs, in order to "determine the best uses of the funding" that was "consistent with the law and [Trump's] priorities". The OMB later said that the pause would exclude "any program that provides direct benefits to Americans", such as Medicaid, the Supplemental Nutrition Assistance Program, Pell Grants, and funding for small businesses and farmers. The pause created uncertainty among government employees, lawmakers, and other organizations, and the OMB rescinded the memo authorizing it on January 29. The federal grant pause was blocked by a federal judge in February following lawsuits against it. A judge ordered the Trump administration to "immediately restore frozen funding" on February 10, finding that the government had "improperly" frozen them.
Trump dividend In 2026 Donald Trump promised that every American citizen would receive a $5,000 payment if Republicans keep control of Congress after 2026 United States House of Representatives elections. He made this announcement during a speech at the Republican National Committee's convention in Dallas; however, in his speech, he did not say whether he would need Congressional approval for these payments, which he referred to as the "Trump Dividend". And giving money to American citizens is not a novel idea, as Trump previously proposed sending $2,000 dividend checks funded by tariffs. JD Vance tied the plan to provide a $5,000 dividend to the revenue generated from US tariffs on imported goods, describing it as a "dividend for American workers". Bernie Moreno announced that he will introduce a bill to guarantee the passage of the Trump Dividend as soon as possible after the November 3rd election. With confidence that Republicans will emerge victorious, Moreno believes that the bill's passage will have a positive impact on America. Democratic leaders lashed out with strong criticism at Trump's proposal. Gavin Newsom harshly criticized Trump, saying that after making people sicker and poorer because of his actions, Trump is now trying to buy their votes with $5,000 in taxpayer-funded money. At RNC midterm convention, Trump pitches $5,000 payments to U.S. citizens — but only if GOP wins House and SenateCBS, Sep 10, 2026 Trump promises $5,000 to every US adult if Republicans win midterms | AP News AP, Sep 10, 2026 Trump promise of $5,000 for US citizens after midterms decried as ‘bribery’ The Guardian, 10 Sep 2026 Trump faces accusations of bribery after promising to pay Americans $5,000 each if Republicans win midterms The Independent, 10 Sep 2026 Trump says every adult American will get $5,000 if Republicans win midtermsBBC, 10 Sep 2026
Affordability
Trump has often confused a decrease in the rate of inflation (disinflation) with prices decreasing (deflation).
Starting in November 2025, Trump increased attention on affordability while being described as out of touch, "On social media, Mr. Trump posted incessantly about the new Lincoln bathroom, remodeled in black and white marble with gold faucets and light fixtures, and on renovations at the Kennedy Center, which he said would be outfitted in marble and "magnificent high end carpeting."" Trump called affordability a "hoax" and "a Democrat scam" for several weeks before acknowledging the issue in 2026.