Economic policy of the first Donald Trump administration

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The economic policy of the first Trump administration was characterized by the individual and corporate tax cuts, attempts to repeal the Affordable Care Act ("Obamacare"), trade protectionism, deregulation focused on the energy and financial sectors, and responses to the COVID-19 pandemic.

Over his first term, Trump reduced federal taxes and increased federal spending, both of which significantly increased federal budget deficits and the national debt.^[1][2][3] The positive economic situation he inherited from the Obama administration^[4][5][6] continued, with a labor market approaching full employment and measures of household income and wealth continuing to improve further into record territory.^[7] Trump also implemented trade protectionism via tariffs, primarily on imports from China.^[1] During Trump's first three years in office, the number of Americans without health insurance increased by 4.6 million (16%),^[8][9] while his tax cuts favored the top earners, and failed to deliver on its promises^[10] worsened income inequality and eroded the country’s revenue needed to continue investment to critical programs like social security and medicine.

Trump took office for the first time at the height of the longest economic expansion in American history.^[11] The 128-month (10.7-year) economic expansion that began in June 2009 abruptly ended at a peak in February 2020, with the U.S. entering a recession due to the COVID-19 pandemic.^[12] The U.S. unemployment rate, which had hit a 50-year low (3.5%) in February 2020, hit a 90-year high (14.7%) just two months later, matching Great Depression levels. In response, Trump signed the $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES) on March 27, 2020 which helped maintain family incomes and savings during the crisis, but contributed to a $3.1 trillion budget deficit (14.9% GDP) for fiscal year 2020, the largest since 1945 relative to the size of the economy.^[13][14] Trump left office with 3 million fewer jobs in the U.S. than when he took office, making Trump the only modern U.S. president to leave office with a smaller workforce though this was, in part, due to the COVID-19 pandemic.^[11] Throughout his presidency, Trump mischaracterized the economy as the best in American history.^[15]

Despite saying during the 2016 campaign he would eliminate the national debt in eight years,^[16] Trump as president approved large increases in government spending, as well as the 2017 tax cut. As a result, the federal budget deficit increased by almost 50%, to nearly $1 trillion (~$1.18 trillion in 2023) in 2019.^[17] Under Trump, the U.S. national debt increased by 39%, reaching $27.75 trillion by the end of his term; the U.S. debt-to-GDP ratio also hit a post-World War II high.^[18]

Analysts argued that there is little evidence that either the economy or employment was impacted in the first 2.5 years of his term despite the Tax Cuts and Jobs Act (TCJA) and other policies.^[19] Additionally, a review by the Tax Policy Center indicated that the TCJA had little impact on business investment.^[20]