El Ignaciano / Marzo 2026

An Assessment of the First Year of the Second Administration of President Trump

Lorenzo Pérez

This article assesses President Trump’s governance approach and how his second administration has addressed some important public policy issues during its first year.  Specifically, fiscal, import tariff, and immigration policies are analyzed from an economic perspective and assessed using the framework of Catholic Social Teaching (CST): promotion of the common good, respect of the dignity of persons residing in their territories, and the provision of a basic safety net to alleviate poverty. In the United States, the existing institutional and legal framework has provided the basis for addressing these objectives.

Overall Assessment of President Trump’s policies in 2025

The US economy has continued to be relatively strong since the beginning of the second administration of President Trump on the basis of continued strong consumer demand and large investments on AI infrastructure.  However, this article concludes that there are a number of concerns that need to be addressed.  President Trump’s governance style raises questions.  The pressing fiscal problem of the rise in the federal public debt is being ignored by the Trump administration.  In doing so the common good is not being promoted.  In addition, the fiscal policy stance is gravely unfair with the upper classes being benefited by tax cuts and the safety net of the poor seriously diminished.  It is not acceptable that the fiscal policy stance does not provide a minimum of public services for the poor in a country as rich as the United States.  The trade protectionist policies of the administration are based on serious misconceptions of economic history and on how economies work.  The disruptions being caused by the higher tariffs and the withdrawal of the country from existing trade agreements will cause serious economic damage and will hurt the common good.

Trump’s immigration policies are the opposite of what CST calls for.  A country has the right and the duty to regulate its border but legal mechanisms should be available to welcome immigrants and facilitate their integration in society. There is evidence that the economic and fiscal effects of immigration are positive and that it does not hurt native-born workers’ employment. Persecuting undocumented immigrants, the way is being done by Immigration and Custom Enforcement (ICE) attempts to the immigrants’ dignity and damages the common good by suppressing the benefits of immigration in a country like the United States of declining fertility and aging population. The rest of this article presents the reasons for reaching these conclusions.

Governance

In implementing his political and economic programs in 2025 President Trump has mostly relied on Executive Orders which has expanded significantly the power of the Executive Branch.¹ This has been encouraged by some decisions of the Supreme Court.²  Many Executive Orders appear to have been  taken hastily without being discussed and decided with the required approval of the legislative  branch of government or based on solid staff analyses and recommendations.  This practice has seriously weakened the constitutional system of checks and balances in the country.

This approach to governing, raises more questions if one considers that President Trump likes to make deals with countries and individuals outside normal channels.  His power and personality make it almost a fiduciary duty for company heads to seek his good graces by donating to presidential projects.  Firms involved in government contracting, seeking regulatory approval of mergers, or favorably decisions on export controls and on import tariffs have done this. Another area of concern in the governance approach of President Trump is that he does not make any attempt to separate his family businesses from presidential decisions.  Previous presidents put their businesses in trust while they were presidents. Mr. Trump re-entered the White House without agreeing, as he did in his first term, not to start any new international business deals. Mr. Trump’s sons have shifted the focus of family businesses from real estate to financial deals that monetize the Trump name and have given rise to multiple questions about conflicts of interest.³

Fiscal Policy in 2025

President Trump was able to obtain support for his fiscal policy objectives through the passage of the One Big Beautiful Bill ACT (OBBBA) in July 2025. The OBBBA extended deficit-financed tax cuts well into the future, added a few more tax cuts, and boosted military spending and spending on anti-immigration efforts.  It offset some of the costs by cutting health care and food subsidies for the poor and by cancelling green energy subsidies.⁴  At the time the OBBBA was passed large increases of the federal government debt were envisaged for the medium term.  Subsequently, the projected deficits were reduced as a result of additional revenue generated by the imposition of import tariffs in 2025.  However, if the Supreme Court rules that the increase in tariff rates were adopted illegally in a case is currently considered, the projected fiscal deficits would increase accordingly.  

The Committee for a Responsible Federal Budget (CRFB) estimates that the OBBBA and other executive actions in 2025 increased the projected new ten-year debt in $4.1 trillion but partially offsetting this is the expected $2.6 trillion from revenues of tariff increases.⁵  All told, $1.5 trillion in new net ten-year debt is estimated to have been added in 2025.  As a result, if this 10-year scenario materializes, the federal debt will grow from about 100 percent of GDP in 2025 to 120 percent of GDP in 2035 (or to 134 percent of GDP if many tariffs are ruled illegal and temporary provisions of OBBBA are made permanent).⁶  This is a dangerous increase in the debt which burdens future generations with the consequences of today’s profligacy.  On current policies, the annual fiscal deficits are likely to be above 6 percent of GDP until 2035. The projected relative size of the debt in relation to GDP are levels observed at beginning of sovereign debt crises in various developed countries.  The size of these projected fiscal deficits in the United States is considerably larger than other developed countries with the exception of France which is undergoing a serious political crisis due to the difficulties in arresting a fiscal crisis. This fiscal policy stance could cause serious economic damage in the years to come.⁷

This irresponsible fiscal policy stance has been adopted by implementing tax cuts with large benefits going to upper income tax payers and corporations, eliminating subsidies that make insurance affordable for working families, and threatening to push millions back into the ranks of the uninsured.  Medicaid is targeted with new restrictions, work requirements, and caps on federal funding.  States are finding themselves squeezed between rising healthcare costs and shrinking federal support.  Regarding the Supplemental Nutritional Assistance Programs for the Poor (SNAP), work-reporting requirements, administrative barriers, and eligibility cuts are designed to push poor people off the rolls.  A less publicized effect of the OBBBA is that the Department of Housing and Urban Development faces cuts of unprecedent scale.  Programs that sustain affordable housing, prevent homelessness, and help low-income families keep a roof over their heads would be gutted.

Expenditure cuts are supposed to be implemented across all departments, but specific information is not available to the author. Elon Musk’s Department of Government Efficiency (DOGE) claimed that it made more than 29,000 cuts to the Federal Government.⁸  But many of the largest savings that DOGE claimed have not materialized.  For example, DOGE claimed that two large Defense Department contracts, one for information technology and another for aircraft maintenance were terminated saving taxpayers $7.9 billion.  But the New York Times has verified that these contracts are still alive and well, and that those savings were an accounting mirage.⁹  DOGE did make thousands of small cuts, jolting foreign aid recipients, American small businesses and local service providers which amounted to little in the scale of the federal budget and certainly no way near the announced objective of $1 trillion in cuts in federal spending.  However, in certain areas like foreign aid the cuts slammed humanitarian programs worldwide.  The dismantled Agency for International Development (AID) provided food and free vaccinations against diseases like HIV, which is particular prevalent in countries in Sub-Saharan Africa.  The US used to provide about 25 percent of all aid supplied to the African continent which has been cancelled now.

It is clear, however, that large resources are being spent in increasing anti-immigrant efforts and in moving military resources around the world for possible misguided foreign policy initiatives. At the same time, the trust funds for Social Security and Medicare remain on an unsustainable path.  By 2032 both trust funds will be insolvent requiring large cuts in benefits or further debt increases.

Import Tariffs and other Trade Issues

In 2025, by unilaterally increasing import tariffs the President Trump administration seriously undermined the principles of the postwar international economic order –non-discrimination among trading partners and adherence to the rule of law as enshrined in the World Trade Organization’s Articles of Agreement.¹⁰ This system had resulted in unprecedent prosperity and poverty reduction worldwide for almost eight decades after the end of the Second World War. Contrary to what President Trump claims, this system significantly benefitted the USA.  Trump’s country-specific increases in tariffs beginning in April 2025 violated the tariff ceilings negotiated under the WTO and invitations to individual countries to negotiate tariff reductions represents another breach of the multilateral rules-based system.  No mention was made of the commitments the USA had made as a member of WTO. By raising tariffs above the WTO agreements and subsequently changing the import tariff rates more than one time because of bilateral negotiations, President Trump injected a lot of uncertainty into the global trading system.

Beginning in April 2025, using the powers of the 1977 International Emergency Economic Powers Act (IEEPA), Trump declared that an emergency situation existed because of the US trade deficit.  At that time Trump announced sharp tariff increases as retaliation for tariffs and non-tariff barriers that supposedly trading partners imposed on US exports.  Afterwards, the administration had a very active tariff policy during the remainder of 2025 as tariff rates were reduced as a result of bilateral negotiations with individual countries or threatened to be raised again because policy disagreements with trading partners in various areas.  Also, some tariff rate increases on some grocery items were called back in November after sharp price increases were observed in supermarkets. 

The Budget Lab (TBL) at Yale University estimates that the effects of all US tariffs and foreign retaliation implemented in 2025 through October 30 result in an overall effective tariff rate of 17.9 percent, the highest since 1934.¹¹ Prior to 2025, the overall effective tariff was about 2 percent.  If the tariff increases under the IEEPA are invalidated the rate would still be 9.1 percent.¹² This estimate includes the recent cut on tariffs to 10 per cent on imports from China following recent bilateral negotiations and new tariffs on medium-and heavy-duty vehicles and buses.  More recently, in January 2026, Trump threatened to impose additional tariff increases to EU countries that were opposing his territorial claims on Greenland.  Subsequently, these threats of tariff increases were taken back after talks with EU and NATO officials in Davos resulted in what Trump calls a “New Framework” for relations between Greenland and the United States.

Assuming that the Federal Reserve looks at the tariff increases as a one discrete price increase and does not react to it, the TBL calculates that tariff increase result  in a price level increase of 1.3 percent in the short run (almost a half of the inflation rate).  This would represent a loss of $1,800 for the average household and $1,000 for households at the bottom of the income distribution.¹³  Although the impact on the households at the bottom of the income distribution is smaller, the tariff increases are a regressive because lower-income households spend a larger fraction of their income than the higher-income household do on average.

Notwithstanding the results mentioned in the previous paragraph, it is safe to say that the economic damage caused by the increase in tariffs has been smaller than expected.  Many economists feared that as the new higher duties drive up prices of consumer goods and inputs-affecting households and firms, respectively—inflation would surge, and that a fall in  real incomes would follow.[ii]  However, there has been less damage than expected due to a combination of factors:  the highest rates are not fully in effect (Trump has postponed some tariff increases repeatedly); major tariff exceptions have been given for some countries (e.g., Canada and Mexico under the US-Mexico-Canada Agreement); due to the fact that as soon as Trump was elected companies began frontloading imports in order to accumulate stocks of goods before the higher anticipated tariffs were introduced; and retailers and importers absorbed most of the cost increase to protect market shares.  The absorption of the costs by retailers and importers will not continue forever and prices will rise accordingly.

The full impact of the tariff increases will still take some time to be felt.  Eventually tariff increases will be felt more at the consumer level.  On a positive side, over a number of years some of the investment commitments made by trading partners of billions of dollars in new factories in the United States during the bilateral trade negotiations may materialized.  However, it is questionable whether this scenario is preferable to one of freer trade where investments are made with less government intervention and less import protection and more along the lines of comparative advantage.  Meanwhile, US trading partners are exploring ways to associate more directly in free trade groups without the United States participating.  The self -imposed exclusion of the United States in new multilateral initiatives could proof to be quite costly to the country. 

Immigration Policy

The anti-immigration campaign

One of the key campaign promises of President Trump was to crack down on illegal immigration,  The evening of his inauguration on January 20, 2025, President Trump signed several Executive Orders related to immigration, including  declaring a national emergency at the Mexico-United States border, blocking asylum seekers from entering the U.S., ending the process of “catch and release” for illegal immigrants, ending birthright citizenship for children born to parents who are not US permanent residents (a suit on birthday citizenship is currently at  Supreme Court), suspending almost all refugee admissions to the US, and officially designating certain international cartels and criminal organizations as terrorists.  On January 29, 2025, President Trump signed the Laken-Riley Act which mandates the detention of immigrants who are charged with or convicted of certain crimes.  In line with the law, anti-immigration efforts were to be concentrated in deporting illegals who had committed crimes in the United States.

These policy initiatives resulted in a sharp decrease in illegal border crossings in 2025 (to the lowest level in decades). Also, many visitors and immigrants already present in the US were deported while others left voluntarily.  The Department of Homeland Security (DHS) claims that in 2025 more than 2.5 million had either been deported or voluntary left.¹⁴  In January 2026 the Brookings Institution reported that, according to its estimates, the United States experienced negative net migration for the first time in decades in 2025, which was estimated to be -10,000 to -295,000 people.  Regarding net migration to the US, the actions taken by the administration have been successful if the goal is net zero migration.

President Trump had promised that deportation efforts would be concentrated on rounding up undocumented immigrants with criminal records. But he has gone further. ICE agents are seeking to deport anyone who has crossed the border illegally, regardless of whether they had lived in the US peacefully for years or even decades and committed no crime.  ICE is detaining indiscriminately people who simply speak with an accent or have brown skin.  The brutal tactics of ICE in its virtual storming of selected American cities can be denounced as immoral and illegal and against CST.¹⁵

Immigration and economic activity

The worrisome picture of the immigration policies of President Trum administration is darkened is one considers the economics of immigration and the economic impact of anti-immigration actions. The overall economic effects of immigration have been generally positive.¹⁶ The foreign-born share of the US population has been rising gradually for decades, and there was a big surge in immigration in the aftermath of Covid. Most immigrants are working-age adults, who do in fact work after arriving and with many opening small businesses. Almost all the increase in employment from before Covid (2019) through 2024 was accounted by foreign born workers.  But immigrants have not been driving native-born Americans out of the work force because unemployment among native-born was historically low in both 2019 and 2024.  What has been happening is the baby boomer cohort has reached retirement age and, as a result, the working-age native-born population has stopped growing.  Without immigration since 2019, US employment would barely have increased, and total employment would be more than 2 percent lower than it is and probably the increased real GDP would have been lower by a similar amount relative to what it would have been otherwise.¹⁷

The number of working-age persons is important because the economy’s total output equals the number of workers multiplied by average output per worker (productivity).  Data for overall productivity growth since the 2020s does not show that the increase in immigration had a negative impact on productivity. If anything, productivity has been somewhat higher than the pre-surge trend suggesting that the surge of immigration has had a positive impact on GDP.  If immigration is brought to a halt or even put in reverse, that could have negative effects on economic activity and inflation. Immigrants bring a set of skills that is different to and complementary to those of native born.¹⁸  Undocumented immigrants are highly concentrated in a few occupations and industries.  The ICE crackdown has probably resulted already in a decline in foreign born employment in 2025. Many immigrant workers are not showing up for work for fear of arrest.  Serious labor shortages in sectors like agriculture, food processing, construction, and housekeeping services are beginning to appear.

Fiscal effects of immigration

The fiscal effects of immigration have to be analyzed at the state and local levels and at the federal level separately.  At the state and local level, the fiscal impact of immigration can be ambiguous.  Immigrants pay taxes and in general expand local economies, which increases revenues.  On the other hand, immigrants increase demand for public services.  In particular, their children attend public schools.  Overall, the effect of immigration on state and local budgets could go either way and can be offset by the impact on the federal finances.

On the other hand, immigration is enormously helpful for the federal budget.  The federal level mainly collects taxes on working-age adults, while its nondefense spending is largely on the elderly (Social Security and Medicare) but also for Medicaid whose most spending go to the elderly or disabled.  In addition, Medicaid pays for much nursing-home care.  It is true that today’s immigrants will eventually collect benefits themselves if they have or eventually acquire legal residency.  But they will not collect benefits for several decades, and some may never collect benefits at all.  Also, to the extent that immigration contributes to increasing the domestic economy it helps to finance defense spending and helps the US to grow its way out of today’s debt.  Immigration, then, has a clearly positive effect on the nation’s finances.

Immigration and native-born workers’ employment and wages

In the public discussion in the United States there is always the concern that immigration may hurt native-born workers in the form of lower wages or competition for existing jobs.  Some people believe that immigrants are taking away jobs that should be going to native-born citizens.  But this implies that if foreign employment had not increased between 2019 and 2024 when the immigration surge occurred, the US economy would have found some 3 million native-born workers to take their place.  However, the data does not indicate that this would have been possible: the employed share of Americans in their prime working years is close to record high, and many of the jobs’ immigrants fill are ones that native-born Americans don’t want to do.¹⁹

Regarding the impact of immigration on the actual wages of native-born workers, it depends on whether foreign born workers are competing head-to-head with native born workers.  In recent years, studies in labor economics indicate that immigrants were not competing head-to-head with native-born workers, even if they had similar levels of education.  Immigrants tend to choose different occupations and have different skills.  If immigrants do not compete directly with native-born, they cannot be driving those workers’ wages down.²⁰

1 In 2025, President Trum signed 225 executive orders which is the highest number signed by any president in a single year.  Some 125 of these executive orders have been challenged in court with some cases reaching the Supreme Court.
2 A decision by the Supreme Court on July 11, 2025, lifted a lower court injunction that blocked President Trump’s directive to reorganize federal agencies.  This ruling has sparked discussions about the implications of bypassing congressional oversight and the potential erosion of constitutional checks and balances.
3 The Economist: ‘ Anything goes America’, November 22nd-28th, 2025 and the New York Times: “Trump and His Inner Circle Weave a Web of Power, Policy, and Profits, January 23, 2026.
4 For an analysis of the OBBBA see the article by the author on El Ignaciano, September 2025.
5 Committee for a Responsible Federal Budget:  “Top 13 Fiscal Charts of 2025, December 31, 2025.
6 CRFB: op. cit.
7 To be fair, the Trump administration is not the only one that has implemented irresponsible fiscal policies.  The Clinton administration which ended in 2001 is the last one which put the fiscal situation on a sustainable basis.
8 Emily Badger, David A. Fahrenthold, Aicia Parlapno, and Margot Sanger-Katz:  For DOGE Returned Meager Savings, New York Times, December 23, 2025
9 These two false claims were more than 25,000 of DOGE’s other claims combined according to The New York Times.
10 Anne O. Krueger: The Case for a Multilateral Trade Organization without America, Project Syndicate Economics, October 27, 2025.
11 The Budget Lab:  State of US tariffs:  October 30, 2025: Updated November 10, 2025
12 The IEEPA passed in 1977 was a law intended to respond to emergencies and the Trump administration used it to impose retaliatory tariffs declaring that the US economy was in an emergency because of its bilateral trade deficits..
13 TBL, op.cit.  TBL also estimates the impact on growth, labor market and fiscal revenues (the latter already discussed above).
14 Jeffrey Frankel:  Why Haven’t Trump’s Tariffs Crashed the US economy?, Project Syndicate, December 29, 2025.
15 The estimates of the deportation figures are soft which suggests that the DHS number of 2.5 million should be taken with a grain of salt.  A New York Times article of January 17, 2026 using federal data shows that the administration deported about 230,000 people who were arrested inside the country and another 270,000 people at the border.
16 The topic of migration has been addressed several times in the El Ignaciano by different authors. For example, see the author’s “Catholic Social Teaching and Migration” in the June 2023 issue of the El Ignaciano.
17 Paul Krugman has a very clear discussion of the economics of immigration and deportation on his Substack of July 20, 20205.  The following discussion relies on his presentation.
18 Krugman, op.cit.
19 Another inexplicable anti-immigration effort of the Trump administration is the charging of $100,000 for visa for special skilled professional coming to work in the United States in top notch industries and the cut in research funding for universities in many technical frontier areas which is resulting in many foreign-born scientists leaving for other countries or for top foreign-born students changing their plans to do graduate work in the US.
20 Krugman, op.cit.
21 Vice President J D Vance has claimed that immigrants are responsible for soaring housing costs.  However academic studies of the link between immigration and rents show that such effects, if they exist, are small.  The effect of any reduction in housing demand caused by mass deportations is probably out weighted by the fall in housing supply as the country loses foreign-born construction workers.

Lorenzo L. Pérez, PhD. in Economics, Univ. of Pennsylvania, is a retired economist who worked for over 30 years at the IMF, and prior to that worked at the AID and the Treasury Dept. of U.S.A. He is a member of the Editorial Board and nonresident columnist of El Ignaciano.